Low sale price of 1MDB-linked penthouse in New York justifies Goldman deal

KUALA LUMPUR : A Malaysian official has pointed to the below market price sale of 1MDB-linked Walker Tower penthouse in New York as further justification for the government’s recent decision to strike a deal with Goldman Sachs.

The penthouse, which was seized by the US Department of Justice (DOJ) as part of a civil forfeiture action, was sold for only US$18 million compared to the purchase price of close to US$51 million six years ago.

The DOJ had seized the asset from Abu Dhabi businessman Khadem al Qubaisi, who had allegedly purchased it with money illegally siphoned from 1MDB.

The New York Post reported that the 6,000 sq ft penthouse was disposed of by the DOJ cheaply, despite there being far higher bids. “The buyer is someone who already owned in the building: Ron Vinder, of Morgan Stanley,” said the report dated Sept 2.

An official attached to Malaysia’s National Financial Crime Centre (NFCC) said Putrajaya’s decision to reach a deal with Goldman Sachs in July was aimed at avoiding “bad deals” such as the Walker Tower transaction.

“This (sale of the penthouse at a low price) is another example (as to) why the Goldman Sachs asset guarantee was beneficial to Malaysia as recommended by us (NFCC),” said the official, who is privy to the negotiations that lead to the deal with Goldman Sachs. The negotiating team was helmed by NFCC chief executive Datuk Seri Mustafar Ali.

 “We already saw the Equanimity and Bombardier (two assets seized from fugitive businessman Jho Low) sold cheaply. Now this disposal of the penthouse at less than half its real value, is one of things that we feared and had come true,” the official told theedgemarkets.com, speaking on condition of anonymity.

The US$35.37 million Bombardier jet was seized in Singapore and sold by the Singapore authorities for US$137,615, from which Malaysia received US$136,505. As for the US$250 million Equanimity, the yacht was sold by the previous Malaysian administration to Genting Malaysia Bhd for US$126 million.

The New York Post said the Walker Tower’s condo board was furious over the US$18 million transaction, as it lowered the property values throughout the building.

The board tried to prevent the deal by saying its members had the right of first refusal but the deal went ahead as recorded on Aug 31, according to the report.

“I don’t blame the buyer — he got the deal of the century,” a member of the board told the Post

In July, Malaysia struck a US$3.9 billion settlement with Goldman Sachs over the investment bank’s mishandling of three bonds totalling US$6.5 billion that were issued by 1MDB in 2012 and 2013.

The settlement includes a cash payment of US$2.5 billion and a guarantee under which Goldman Sachs is guaranteeing the return of US$1.4 billion of 1MDB assets seized by authorities around the world, in exchange for Malaysia dropping charges against the bank.

Goldman Sachs paid the US$2.5 billion last week and on Friday, Malaysian prosecutors withdrew the charges against the bank.

Khadem, formerly International Petroleum Investment Corporation managing director, has been jailed for 15 years in Abu Dhabi after being convicted of 1MDB related offences.

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