Malaysia files criminal charges against Goldman Sachs over 1MDB scandal
KUALA LUMPUR: Malaysia filed criminal charges on Monday against Goldman Sachs and two of its former employees over the alleged theft of billions of dollars, heaping fresh pressure on the Wall Street titan over the 1MDB scandal.
Goldman subsidiaries and exbankers Tim Leissner and Ng Chong Hwa are accused of misappropriating $2.7 billion, bribing officials and giving false statements in relation to bond issues they arranged for state fund 1MDB.
Allegations that huge sums were looted from the investment vehicle and used to buy everything from yachts to artwork, in a fraud that involved former Malaysian leader Najib Razak, contributed to the last government’s shock defeat at May elections.
Both former Goldman employees had already been charged over the scandal in the US last month, with Leissner pleading guilty while Ng was arrested in Malaysia. Low Taek Jho, a fugitive Malaysian financier accused of masterminding the fraud, was also hit with new charges. The news represented a fresh blow to Goldman, whose corporate culture has come under scrutiny as a steady stream of accusations surrounding its involvement in the controversy have emerged.
“The highest standards are expected of Goldman Sachs,” said Malaysian attorney-general Tommy Thomas, as he announced the charges. “They have fallen far short of any standard. In consequence, they have to be held accountable.”
Goldman said in a statement the charges were “misdirected”, adding: “We will vigorously defend them.”
The bank has come under fire for its role in underwriting bonds totalling $6.5 billion on three occasions for 1MDB, for which they earned an eye-watering $600 million in fees. Thomas said Goldman and its former employees were accused of making false and misleading statements to misappropriate $2.7 billion from the bond issuances, which took place in 2012 and 2013.
Leissner, who worked as Southeast Asia chairman and managing director at Goldman, and Ng, a managing director at the bank, conspired with Jho and others to bribe Malaysian officials to ensure that Goldman was selected to work on the bonds, Thomas said in a statement.
The money earned by Goldman for the work on the bonds was “several times higher than the prevailing market rates and industry norms”, the statement said.
Those accused personally benefited by receiving stolen funds and also got large bonuses and improved their career prospects, while false statements were presented to investors suggesting the proceeds of the issuances would be used for legitimate purposes, Thomas said.