Malaysia-Goldman 1MDB settlement must not ignore Goldman's 1MDB linked Signum Magnolia bond profits (among others) -Goldman about to secure close to a decade's use of billions in Malaysian taxpayer money at zero interest, no share of profit

by Ganesh Sahathevan

Leslie Lopez of Singapore's Straits Times has reported: 

The Malaysian government and international banking giant Goldman Sachs will resume talks this week in Kuala Lumpur in a final attempt between both parties to hammer out a multi-billion dollar financial settlement over the fiasco at state-owned 1Malaysian Development Bhd (1MDB).

Top level US executives from Goldman Sachs and members of their legal team arrived on Saturday (July 18) - after obtaining special Malaysian government approval due to strict coronavirus travel restrictions - for the talks with the special task force for the 1MDB recovery campaign led by Attorney-General Idrus Harun.

"The prospects of getting a settlement are strong after both sides have agreed on key parameters in recent weeks that are needed to move forward," said one Malaysian government official close to the situation, without elaborating.

A senior US-based financial executive, who has been assisting the Malaysian government in the protracted negotiations with a wide cast of international counter parties tied directly to the campaign to recoup monies looted from 1MDB, noted that "the GS (Goldman Sachs) guys would not be making the long trip to Malaysia if a deal was not within reach".

The visiting six-member Goldman Sachs team will be assisted by its Malaysian legal representative Kumar Partnership, while the Malaysian task force will comprise Tan Sri Idrus and Solicitor General II Siti Zainab Omar.

Talks were also hobbled due to legitimacy issues that have saddled the controversial government that wrested power in March after elected representatives from Mr Muhyiddin's Parti Pribumi Bersatu Malaysia and other renegade politicians abandoned PH to form a very fragile new coalition government.

The article needs to be read in full and it does give the impression that Malaysia is giving in. Worse, it does seem as if Goldman will get away without being required to account for the profits it has made over the past decade using 1MDB money. Simply put, Goldman looks like it is going to secure a deal where it has had use of billions of dollars of Malaysian taxpayer money at zero interest. 

TO BE READ WITH 

Sunday, November 3, 2019

Goldman's USD 2B settlement offered Malaysia might be the profit from the Signum Magnolia bonds, which in any event belong to Malaysia

by Ganesh Sahathevan

“Goldman Sachs has offered something like less than US$2 billion,” Tun Dr Mahathir told the newspaper. “We are not satisfied with that amount so we are still talking to them... If they respond reasonably we might not insist on getting that US$7.5 billion.” - NSTP/LUQMAN HAKIM ZUBIR

FT UK and others have reported that Malaysian PM Mahathir rejected an offer from Goldman Sachs of USD 2 Billion, in settlement of all and any liability arising out of the 1MDB matter.


It is likely that Goldman was simply offering Mahathir the profit from its Signum Magnolia bond offering, which is in fact a derivative of the USD 3.5 Billion bond offering arranged by Goldman which lies at the heart of the 1MDB theft (see below).

It is important to recall that Goldman's 1MDB bond strategy, and hence the strategy underlying its Signum Magnolia bond offering, is selling as sovereigns bonds bought as junk ie 1MDB junks were bought unrated,or as junk,and then immediately sold and repackaged as the sovereigns which they always were.

Anyone can make money that way,so Goldman may well be offering Mahathir its free lunch (or riskless profit) courtesy the Najib administration, in an industry where free lunches are never ever supposed to exist.Goldman's profits from the sale of the 1MDB bonds and the derivatives, including the Signum Magnolia bonds, are all owed the Malaysian people.

Having said that, all matters will be clearer if Lim Guan Eng's Ministry of Finance makes known all arrangements with Goldman Sachs.

END 

SEE ALSO 

Sunday, October 7, 2018

1MDB and the USD 28 Billion Signum Magnolia Ltd of the Cayman Islands.

by Ganesh Sahathevan






IPIC made an announcement to the London Stock Exchange on 10 October 2018.The announcement concerned ,among other things, the  resumption of its !MDB guarantee obligations by Abu Dhabi's Mubadalla.The announcment included these statements:

Signum Guaranteed Obligations means the notes and loans of Signum Magnolia Limited which are collateralised by the USD 1.75 Billion 5.75% Guaranteed Notes due 2022 of 1MDB Energy (Langat) Limited guaranteed by 1MDB and further guaranteed by IPIC."


There does not appear to be any mention of Signum Magnolia Limited in any previous IPIC announcement which concerned 1MDB.


Signum is a Cayman Island incorporated company. However Emirates NBD Bank describes in its 2012 Annual Report as a Malaysian company:

Some of the notable transactions concluded during the year included acting as mandated lead arranger, advisor and bookrunner for syndicated loans valuing USD 6.5 billion, arranged for high profile clients like Signum Magnolia Limited-Malaysia,



Signum bonds pay a coupon of 4.805%. The bond was issued on 07.01.2013 and has a term of up to 02.11.2022. The company is able to issue bonds with a face value of up to EUR 25 Billion , or USD 28.8 Billion. It is not clear if it has already issued bonds up to the maximum allowable.

It is also unclear where and to whom the coupon differential of 0.895%  is going to.Given the USD 1.75 Billion face value of the 1MDB bonds, the differential works out to approximately USD 160

Million (given half yearly coupon payments and accounting for compounding).

This type of secrecy does not sit well with professed ethos of New Malaysia.

END