Daily Management Review

Criminal Charges Against 17 Goldman Sachs Executives Filed By Malaysis Over 1MDB Scandal


Criminal Charges Against 17 Goldman Sachs Executives Filed By Malaysis Over 1MDB Scandal
Following completion of investigations in the multi-billion-dollar corruption scandal that resulted in the dissolution of the State fund of Malaysia popularly known as the 1MDB, investigation authorities in the country has now filed criminal charges against 17 current and former directors of subsidiaries of Goldman Sachs Group Inc.
Investigations into the role of the United States bank in helping of the raising of $6.5 billion via bonds for the 1Malaysia Development Bhd (1MDB) have been ongoing for some time. The 1MDB scam has led Malaysian investigators to probe corruption and money laundering charges in at least six different countries. 
The offering statements of the bond that had been filed with the regulators contained statements that were false, misleading or involved material omissions, Malaysian prosecutors have said, and have confirmed earlier that  $2.7 billion of the fund had already been siphoned off.
Malaysian Attorney General Tommy Thomas said that sections within the Malaysian Capital Markets and Services Act formed the basis of the filing of the charges on Friday. According to this law, prosecutors are allowed to hold executives responsible for crimes or illegal acts that had been committed by the company that they worked for.
"Custodial sentences and criminal fines will be sought against the accused ... given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds," Thomas said in a statement.
The charges were misdirected, Goldman Sachs said.
"We believe the charges announced today, along with those against three Goldman Sachs entities announced in December last year, are misdirected and will be vigorously defended," a Goldman Sachs spokesman in Hong Kong said. "Under the Malaysian legal process, the firm and the individual entity directors were not afforded an opportunity to be heard prior to the filing of these charges, which do not affect our ability to conduct our current business globally."
Those charged on Friday include Michael Evans, president of Alibaba Group Holding Ltd. Alibaba said tat they were monitoring the situation and was aware of the charges brought against Evans.
According to prosecutors, each of the charges is punishable with a maximum jail term of 10 years as well as a penalty of at least 1 million ringgit ($239,000).
Material facts in the bond offerings were omitted by the Goldman Sachs units, said the charges. One such information was that the operator and key intermediary for 1MDB was the then Malaysian financier Low Taek Jho.
Written assurances that no intermediaries were involved were given to the bank for each transaction by 1MDB, said Goldman on Friday.
In connection to the 1MDB scandal, Malaysian authorities had filed charges against two of Goldman Sachs’ former employees as well as against three subsidiaries of the US bank.
All allegations and charges against it have been consistently denied by Goldman Sachs. It has said that it was lied to earlier by certain members of the former Malaysian government and 1MDB about how the proceeds of the fund were to be used.

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