UPDATE 2-Malaysia, Goldman discuss dropping 1MDB charges- top prosecutor to Nikkei

* Two rounds of discussions already held- attorney general

* Malaysia open to more discussions with Goldman- AG Thomas

* AG says Malaysia has strong case, very confident of winning (Adds details)

KUALA LUMPUR, Oct 17 (Reuters) - Malaysia is open to more talks with Goldman Sachs after having two rounds of discussions to drop criminal charges against three units of the bank over the 1MDB scandal, the country’s top prosecutor told the Nikkei Asian Review.

Malaysian and U.S. investigators say about $4.5 billion was misappropriated from the now-defunct state investment fund 1Malaysia Development Berhad, set up in 2009 by former prime minister Najib Razak.

Last year, Malaysia filed criminal charges against Goldman over its role as underwriter and arranger of three bond sales that raised $6.5 billion for 1MDB. Prosecutors in August filed criminal charges against 17 current and former directors at its units.

Malaysia had a strong case and was very confident of winning, Nikkei on Thursday cited Malaysian Attorney General Tommy Thomas as saying, but that criminal charges and settlement negotiations were taking place in parallel.

“A lot of cases are even settled even after the trial begins,” he said. “So the doors for discussion are still open while the prosecution readies the criminal case.”

Thomas and officials in his office were not immediately available for comment.

No date has been set for the criminal trial yet.

Malaysia’s finance minister said in January the government would be ready to discuss dropping criminal charges against Goldman if it agreed to pay $7.5 billion in reparations.

A Goldman spokesman declined to comment. The bank said on Tuesday it was in discussions with governmental and regulatory authorities on the possibility of a resolution of investigations relating to 1MDB.

Najib, who lost a general election last year, is now facing dozens of graft and money laundering charges over allegations that he received about $1 billion in 1MDB funds. He has pleaded not guilty.

Thomas said the government estimated that fugitive financier Jho Low, whom investigators have named as a key figure in the scandal, stole more than $10 billion from 1MDB but that it would be impossible to recover the full amount embezzled.

Low has consistently denied wrongdoing and a spokesman for him said in July that “illegitimate proceedings” had been brought by the government of Prime Minister Mahathir Mohamad, and that their outcome was “pre-ordained and politically motivated”. (Reporting by A. Ananthalakshmi and Rozanna Latiff Editing by Alex Richardson, Robert Birsel, Raju Gopalakrishnan)