Again and again, Malaysia has publicly demanded Goldman Sachs pay an eye-popping $7.5 billion for its role in the 1MDB scandal. But privately, Malaysian negotiators are considering settling for a fraction of that.

Representatives for Malaysia have discussed figures of around $2 billion to $3 billion in talks with the Wall Street bank, according to people with knowledge of the matter. Though a final deal may diverge from that range, it shows what negotiators for the country may be willing to accept. Simultaneously, Malaysian prosecutors are trying to turn up the pressure by pushing for Goldman's criminal case to be heard at the country's High Court.

Prime Minister Mahathir Mohamad, 94, is keen to reach an accord before year-end to show progress on his signature pledge to recoup money plundered from the scandal-ridden state investment fund. He's dispatched Daim Zainuddin, a confidant outside his Cabinet, to serve as a top deal-maker, the people said, asking not to be named because talks are confidential. A sizable settlement would help cement the country's fiscal footing, which Mahathir has cited as a reason he's delayed handing over power to his former protege, Anwar Ibrahim.