Goldman Sachs is charged in £2bn Malaysia scandal

GOLDMAN Sachs has been hit with fraud charges in Malaysia after allegedly helping to pillage £2.1bn from a sovereign wealth fund.

The investment bank funnelled cash from the 1MDB fund towards corrupt officials, according to Malaysian prosecutors, who want it to be hit with massive fines.

The bank’s former employees Tim Leissner and Roger Ng have also been charged with fraud.

Fugitive Malaysian financier Jho Low, who is said to have masterminded the operation, was hit with extra charges in addition to ones he is already facing.

It is the latest twist in a saga which has been catastrophic for Goldman’s reputation, with shares down over a third this year. The stock was hit again yesterday, dropping nearly 3pc in New York.

The scandal allegedly saw cash looted from 1MDB by those involved in running it and used to buy New York apartments, hotels, yachts and a jet.

Money was even pumped into Hollywood films, it is claimed including The Wolf Of Wall Street, a tale of financial excess starring Leonardo DiCaprio.

Malaysia’s former prime minister Najib Razak lost an election and fell from power amid outrage over 1MDB in May. Razak has since been arrested over money laundering claims, which he denies. His successor Mahathir Bin Mohamad has called for tough action against Goldman.

Attorney general Tommy Thomas accused Goldman and the individuals charged of misleading investors about a bond sale connected to the fund, and skimming off £2.1bn.

Thomas said: ‘Having held themselves out as the pre-eminent global adviser and arranger for bonds, the highest standards are expected of Goldman Sachs. They have fallen far short of any standard. In consequence, they have to be held accountable.’

Prosecutors will push for all the individuals charged to face ten years in prison, the maximum possible penalty.

Goldman – which is being investigated in at least six countries over 1MDB, including the US – denies wrongdoing.

A spokesman for Goldman said: ‘We believe these charges are misdirected and we 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.’