We now know the parameters within which the true figure will fall. Malaysia wants $7.5 billion, and won’t get it. Goldman Sachs, says prime minister Mahathir Mohamad, has offered less than $2 billion, and that’s not enough.
Mahathir told the FT: “If they respond reasonably, we might not insist on getting that $7.5 billion.”
So, what’s the figure? A popular answer in the investment banking community is $4 billion. But would Goldman pay it?
For a while, in the earlier stages of the scandal, it looked like Goldman might not offer anything: it doesn’t have a huge amount of business in Malaysia anyway, and it is hard to see over what timeframe it could possibly accrue $2 billion of fees from the country.
The disputed capital raisings around 1MDB made Goldman about $600 million, and it has never been clear where the $7.5 billion figure Mahathir names came from in the first place.
Nevertheless, the reputational hit to Goldman is considerable and long-lasting, and it is understandable that it would want to draw a line under it.
In that respect, though, Malaysia is not the biggest worry: that’s the Department of Justice, which will draw its own conclusions about what Goldman owes. That decision has been a long time coming and Goldman won’t really be able to move on until it comes.