Published: Tue, December 18, 2018
Global News | By Blake Casey

Malaysia charges Goldman Sachs as pressure mounts over 1MDB scandal

Malaysia charges Goldman Sachs as pressure mounts over 1MDB scandal

Charges were bought on Monday against Goldman Sachs investment bank and its former employees Tim Leissner, Roger Ng.

Malaysia has filed criminal charges against Goldman Sachs and two former employees in connection with a corruption and money laundering probe at the country's investment fund, 1MDB.

Malaysia has brought criminal charges against Goldman Sachs for allegedly paying bribes and colluding in the theft of billions of dollars in a scheme said to have been masterminded by the country's previous prime minister.

The government of former Malaysian Prime Minister Najib Razak set up the 1MDB fund in 2009, and the U.S. Justice Department estimated US$4.5 billion was misappropriated by high-level fund officials and their associates between 2009 and 2014.

"The charges arise from the commission and abetment of false or misleading statements by all the accused in order to dishonestly misappropriate US$2.7 billion from the proceeds of three bonds issued by the subsidiaries of 1MDB, which were arranged and underwritten by Goldman Sachs", Mr Thomas said in a statement.

In the statement, the attorney general revealed that the offenses in question were in relation to documents for global bond sale offering in 2012 and 2013 by Malaysia's state-run investment ehicle 1Malaysia Development Bhd., also known as 1MDB.

Prosecutors would seek fines against the accused "well in excess" of the allegedly misappropriated $2.7 billion bond proceeds plus $600 million in fees received by Goldman Sachs, he said.

Malaysia filed criminal charges against Goldman Sachs and two former executives for "grave violations of our securities laws" relating to its $6.5 billion Malaysian sovereign wealth fund.

Thomas also said the fees received by Goldman Sachs for the bond offering were higher than prevailing market rates. "They have fallen far short of any standard".

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Leissner, who headed Goldman's operations in Southeast Asia, pleaded guilty in the USA last month to money laundering conspiracy and conspiring to violate foreign bribery laws after the Justice Department charged him, Ng and Low in relation to the 1MDB scandal.

"We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case", Goldman Sachs said in a statement quoted by MarketWatch. In outcome, they have to be held accountable'. Malaysia is pursuing the claim on the basis that the relevant bond documents were sent to the regulator in its offshore banking haven in Labuan, and therefore were covered by its securities law, Thomas said in the statement.

Malaysia will seek custodial sentences against each of the accused individuals with a maximum term of 10 years, according to the statement. As well as Leissner, Ng and Low, Malaysian authorities charged former 1MDB employee Jasmine Loo Ai Swan.

The scandal allegedly saw cash looted from 1MDB by those involved in running it and used to buy NY apartments, hotels, yachts and a jet.

United States investment bank Goldman Sachs ignored repeated internal alarm bells that were tripped during its pursuit of Malaysian investment firm 1MDB's business, according to a Wall Street Journal report today.

Malaysian-born Low was well known for his parties and for owning a string of properties including a Beverley Hills mansion.

The 1MDB scandal was a major reason for former premier Najib Razak's shock election defeat in May.

And two Abu Dhabi funds, International Petroleum Investment Co. and Aabar Investments have sued Goldman Sachs in a civil suit in NY, seeking damages for alleged fraud in connection with embezzlement at 1MDB.

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