12 Aug 2019
Malaysia filed criminal charges on Friday against 17 current and former directors at subsidiaries of Goldman Sachs Group Inc (GS.N) following an investigation into a multi-billion-dollar corruption scandal that led to the demise of state fund 1MDB.
The U.S. bank has been under scrutiny for its role in helping to raise $6.5 billion through bond offerings for 1Malaysia Development Bhd (1MDB), the subject of corruption and money laundering investigations in at least six countries.
But Malaysian prosecutors have said $2.7 billion of the proceeds were diverted and the offering statements filed with the regulators contained statements that were false, misleading or involved material omissions.
Friday’s charges were brought under a section of the Malaysian Capital Markets and Services Act that holds certain senior executives responsible for offences that may have been committed by the firm, Attorney General Tommy Thomas said.
“Custodial sentences and criminal fines will be sought against the accused … given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds,” Thomas said in a statement.
Goldman Sachs said the charges were misdirected.
“We believe the charges announced today, along with those against three Goldman Sachs entities announced in December last year, are misdirected and will be vigorously defended,” a Goldman Sachs spokesman in Hong Kong said.
“Under the Malaysian legal process, the firm and the individual entity directors were not afforded an opportunity to be heard prior to the filing of these charges, which do not affect our ability to conduct our current business globally.”
Those charged on Friday include Richard Gnodde, chief executive of Goldman Sachs International, Michael Evans, president of Alibaba Group Holding Ltd (BABA.N) and a former director at Goldman Sachs (Asia) LLC, and Michael Sherwood, former vice chairman of Goldman Sachs Group.
An Alibaba spokeswoman said the company was aware of the charges against Evans and would continue to monitor the situation.
By A. Ananthalakshmi, Josh Horwitz and Jennifer Hughes, Reuters, 9 August 2019
Read more at Reuters
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