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Goldman Sachs said it has sued the government of Malaysia over disputed payments the Wall Street bank argued are not being recognised as part of its 2020 settlement over the 1MDB money-laundering scandal.

The complaint marks the latest chapter in Goldman’s role in the multibillion-dollar embezzlement scheme involving Malaysian state investment fund 1MDB, one of the largest financial crimes of all time and the most painful experience in Goldman’s recent history. 

“Today, we filed for arbitration against the government of Malaysia for violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs in our settlement agreement and to recover other assets,” Goldman said in a statement. 

Goldman filed the complaint in the London Court of International Arbitration, according to a person familiar with the matter. 

The dispute centres on a settlement Goldman agreed in 2020, in which it paid the government of Malaysia $2.5bn over its role in the 1MDB scandal.

Goldman had also agreed to send at least $500mn in assets related to 1MDB by August 2022 or else be faced with another $250mn penalty. Goldman and Malaysia are at odds over whether the bank has provided the assets.  

Malaysia prime minister Anwar Ibrahim this year talked publicly about Goldman needing to honour its settlement. In August he told CNBC that his government had not ruled out filing a lawsuit against the bank. 

A representative for the Malaysian government could not immediately be reached for comment late on Wednesday. The complaint was first reported by Bloomberg.

US authorities have alleged that $4.5bn was misused and spent around the world on luxury real estate, expensive jewellery and to finance The Wolf of Wall Street, the Oscar-nominated film on financial malfeasance, among other things.

Malaysian financier Jho Low was alleged to be the mastermind of the scheme, but US officials have said Goldman played a pivotal role, arguing that the bank should have detected warning signs that could have prevented at least some part of the theft from the fund.

Former Goldman banker Roger Ng this year was sentenced to 10 years in prison over his role in the 1MDB case. Ex-Goldman partner Tim Leissner has also pleaded guilty to charges of violating foreign bribery laws in connection with 1MDB and conspiring to launder money. His sentencing is set for March 2024.

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