Adds details from source, reply from Goldman Sachs, background
KUALA LUMPUR, July 20 (Reuters) - Executives from U.S. investment bank Goldman Sachs would resume negotiations with the Malaysian government this week over the recovery of assets lost in the scandal at sovereign fund 1MDB, Finance Minister Tengku Zafrul Abdul Aziz said on Monday.
Last month, Tengku Zafrul said even compensation of $3 billion would be unacceptable, and that Malaysia would pursue its legal case against Goldman Sachs until an acceptable settlement was offered.
Three units of Goldman Sachs Group Inc GS.N have pleaded not guilty in Malaysia to misleading investors over bond sales totalling $6.5 billion that the bank helped raise for 1MDB.
Public outrage over the billions of dollars lost at 1MDB played a part in the defeat of then prime minister Najib Razak in a 2018 election. Najib's United Malays National Organisation returned to power in March as a partner in a new coalition government led by Prime Minister Yassin Muhyiddin.
Confirming the arrival in Malaysia of the Goldman negotiating team in a statement on Monday, Tengku Zafrul expressed hope that the talks would "enable us to move closer towards achieving the desired results on the recovery of 1MDB assets."
A source close to the government said Malaysia's attorney-general, Idrus Harun, will lead the Malaysian team in talks with Goldman Sachs' executives.
The source said it was unclear if a settlement would be reached, as "it depends on what GS is bringing to the table".
The Malaysian attorney-general's office did not immediately respond to a request for comment.
Edward Naylor, Goldman Sachs's Asia head of corporate communications, declined to comment "at this stage".
On Sunday, Singapore daily The Straits Times reported that a six-member team of Goldman Sachs top executives and legal advisors had entered Malaysia on July 18, on a special permit from the Malaysian government, to resume negotiations on the settlement deal.
Malaysia had imposed a ban on foreign arrivals since March as part of strict measures to contain the spread of the coronavirus pandemic.
(Reporting by Joseph Sipalan; Editing by Simon Cameron-Moore)
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