Money laundering: Malaysia charges Goldman Sachs, ex-bankers over 1MDB scandal
18 Dec 2018

Malaysia has filed criminal charges against Goldman Sachs and its former executives for their alleged role in the multi-billion dollar corruption and money laundering scandal involving state investment fund 1Malaysia Development Bhd (1MDB).

The prosecution, which is seeking billions in fines from the bank and the accused former workers, said about $2.7 billion had been diverted from 1MDB.

Malaysian and US authorities have linked 1MDB bond sales organised by Goldman Sachs to the scandal, which also alleges former Malaysian Prime Minister Najib Razak stole millions from the fund.

Goldman said in an emailed statement: “We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case. The firm continues to cooperate with all authorities investigating these matters.”

Razak has denied the allegations.

Malaysian attorney general Tommy Thomas said Goldman Sachs benefited by receiving underwriting and arranging fees of approximately USD600 million which was several times higher than the prevailing market rates and industry norms.

In addition to personally receiving part of the misappropriated Bond proceeds, Goldman Sachs’ employees and directors allegedly received large bonuses and enhanced career prospects at Goldman Sachs and in the investment banking industry generally.

“Malaysia considers the allegations in the charges against all the accused to be grave violations of our securities laws, and to reflect their severity, prosecutors will seek criminal fines against the accused well in excess of the USD2.7 billion misappropriated from the Bonds proceeds and USD600 million in fees received by Goldman Sachs, and custodial sentences against each of the individual accused: the maximum term of imprisonment being 10 years,” he exlpained.

“Their fraud goes to the heart of our capital markets, and if no criminal proceedings are instituted against the accused, their undermining of our financial system and market integrity will go unpunished.”

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