Finance Finance News Malaysia files criminal charges against Goldman Sachs over 1MDB scandal

Malaysia files criminal charges against Goldman Sachs over 1MDB scandal

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Goldman Sachs says it was lied to by the former Malaysian PM. Photo: EPA
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Malaysia has filed criminal charges against Goldman Sachs and two former executives for their role in the alleged multi-billion-dollar ransacking of the 1MDB state investment fund.

The US-based investment bank fired back Tuesday morning accusing  the previous Malaysian government of misleading conduct.

Malaysian Attorney-General Tommy Thomas said in a statement he would seek jail terms as well as billions in fines from Goldman Sachs and four other individuals who allegedly diverted about $US2.7 billion ($3.8 billion) from 1Malaysia Development Bhd (1MDB).

The filing was the first time Goldman Sachs, which has consistently denied wrongdoing, has faced criminal charges in the 1MDB scandal.

“Certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of proceeds from these transactions,” Goldman spokesman Michael DuVally said in a statement.

“1MDB, whose CEO and board reported directly to the [Malaysian] prime minister at the time, also provided written assurances to Goldman Sachs for each transaction that no intermediaries were involved,” he said.

The government of former Malaysian prime minister Najib Razak set up the 1MDB fund in 2009 and the US Justice Department estimated $US4.5 billion ($6.3 billion) was misappropriated by fund officials and their associates between 2009 and 2014.

Mr DuVally said the bank was not afforded the chance to be heard before the filing of the charges and would contest the allegations.

Goldman Sachs has been under scrutiny for its role in helping raise $US6.5 billion ($9 billion) through three bond offerings for 1MDB, which is the subject of investigations in at least six countries.

Analysts on Monday said that investors had expected Malaysian authorities would file charges against Goldman Sachs and that it would seek fines, including the $US600 million ($836 million) in fees Goldman received for the deal and the allegedly misappropriated $US2.7 billion ($3.8 billion) bond proceeds.

Malaysia has said it will also seek prison terms of up to 10 years for each of the individuals accused.

The US Justice Department announced criminal charges against two former Goldman bankers, Tim Leissner and Roger Ng, on November 1.

On the same day, prosecutors in the US Attorney’s Office in Brooklyn said Leissner had pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act and had agreed to forfeit $US43.7 million ($61 million).

Ng, detained in Malaysia, faces extradition to the United States.