Goldman Sachs Slapped with Criminal Charges by Malaysia

According to the latest news update on the case, Reuters reported that the Malaysian government has filed criminal charges against Goldman Sachs Group Inc., stating that the bank had made false statements and omitted critical facts when offering circulars for the bonds it sold for 1MDB, the Malaysian state fund.

On Monday, Malaysia filed charges against three Goldman Sachs business divisions in Kuala Lumpur. The charges were in connection with the American bank’s role as an underwriter as well as arranger of 3 bonds sales which had raised a total of $6.5 billion for 1MDB. These are the first criminal charges against the bank for the part it played in the scandal.
The US Department of Justice has estimated that this scandal involved fraud to the tune of $4.5 billion by high-level fund officials in 1MDB as well as their associates from 2009 to 2014.
Besides charging the 3 Goldman Sachs units directly involved with the bond sales, the Malaysian government also charged ex-Goldman partner Tim Leissner, a 1MDB employee named Jasmine Loo as well as Jho Low, the financier from Malaysia who is suspected to be at the core of this scandal.
The three units charged in the case are Goldman Sachs (Asia) LLC, which is the bank’s key unit that has been registered in the US, Goldman Sachs (Singapore) PTE and the London division of the bank, Goldman Sachs International.
Each of these individuals have been charged with suspected corruption and money laundering in relation to 1MDB, the organization that had been founded by the ex-Prime Minister of Malaysia, Najib Razak.
Added to the charges, Malaysia also announced that it was looking at Goldman Sachs, and the others charged in this case, paying back the $600 million that had been given in fees for these sales, as well as the supposedly misappropriated $2.7 billion that the sales had raised.
According to the charge sheets, these criminal charges carry with them up to 10 years in prison as well as fines of a minimum of 1 million Ringgit (~$240,000).
Goldman Sachs on its part has consistently denied any wrongdoing. On Tuesday, the bank stated that certain members of the Malaysian government at that time as well as officials from 1MDB had lied to them about the funds raised from these bond sales.
Responding to the news on Monday, Goldman issued a statement that clarified that as per the legal processes in Malaysia, the bank had not been permitted to state its case before these charges had been filed against Goldman entities. Therefore, the bank stated, it was going to strongly contest these charges. The bank also stated that these charged did not affect their ability to conduct their business globally.
Low also issued a statement on Monday, maintaining that he was innocent of these charges, however, his spokesperson did not respond to requests for a comment with regard to the fresh charges made by the Malaysian government.
Leissner’s lawyer was not available for comment after working hours on Monday night. And the third person charged, 1MDB employee Loo, against whom her government has also brought other charges, has been silent about this case, and has not yet been traced.
The Malaysian government named a fourth person that it was going to charge – Roger Ng. Ng is an ex-Goldman Sachs banker and an associate of Leissner, however, the list of charges against him have not yet been revealed.
The Justice Department in the US already filed criminal charges against Leissner and Ng on November 1 last month. Leissner admitted to conspiracy to laundering money and violation of the Foreign Corrupt Practices Act. He has agreed to forfeit $47.3 million. Ng is being detained in Malaysia and is facing extradition to the US.