This is a developing story.
Malaysia has filed criminal charges against Goldman Sachs over its dealings with scandal-hit investment fund 1MDB. The US investment bank and four individuals — two of them former Goldman employees — are accused of “grave violations” of Malaysia’s securities laws, Attorney General Tommy Thomas said in a statement Monday.
The case relates to bond sales that the bank arranged and underwrote for 1Malaysia Development Berhad (1MDB) in 2012 and 2013. “Having held themselves out as the pre-eminent global adviser/arranger for bonds, the highest standards are expected of Goldman Sachs,” Thomas said in the statement. “They have fallen far short of any standard. In consequence, they have to be held accountable.”
He accused the bank and four individuals of misleading investors about the bond sales and fraudulently diverting $2.7 billion of the proceeds. Prosecutors will seek fines against Goldman Sachs and the accused individuals in excess of US$3.3 billion, Thomas said. That figure represents the amount allegedly misappropriated plus an additional US$600 million in fees that Goldman received for its work on the deals.
“We believe these charges are misdirected and we will vigorously defend them and look forward to the opportunity to present our case,” a Goldman Sachs spokesman said in a statement. “The firm continues to cooperate with all authorities investigating these matters.”
Prosecutors will also press for prison sentences of up to 10 years for the individuals, Thomas said. One of the two former Goldman Sachs bankers facing criminal charges is its former South East Asia chairman Tim Leissner.
Leissner pleaded guilty in August in the United States to conspiring to steal money from 1MDB. The US Federal Reserve is also reported to be probing Goldman Sachs over its ties to 1MDB.
Source: Daniel Shane/CNN International