Daily Management Review

Criminal Charges Filed Against Goldman Sachs In Malaysia In 1MDB Scandal


Criminal Charges Filed Against Goldman Sachs In Malaysia In 1MDB Scandal
Criminal charges are being framed in Malaysia against the U.S. bank Goldman Sachs in relation to the huge multibillion dollar scam there known popularly as the 1MDB scandal.
Malaysia's former prime minister has already been forced out of office because of the scandal in which billions of dollars had been allegedly siphoned off from the "1MDB" development fund. Corruption charges in both U.S. and Malaysian courts have been filed against a number of the top administrators of the Malaysian fund. Most of the accused have denied the charges.
But this is the first time that charges are being pressed against Goldman Sachs because the bank had helped the fund in raising about $6.5 billion. Billions of dollars in fines and prison sentences of up to 10 years for each of the four people charged have been sought by the Malaysian authorities.
Among those facing new charges in Malaysia are two former Goldman Sachs bankers, Tim Leissner and Roger Ng Chong Hwa. Jho Low, a financier who is believed to be the brain behind the large-scale fraud, and Jasmine Loo Ai Swan, the fund's former general counsel, - both Malaysians are also facing charges.
The US Department of Justice also pressed charges last month in this scam against Leissner, Chong Hwa and Jho Low.Leissner has pleaded guilty.
It was in the knowledge of Goldman Sachs that the money that was being raised would be "misappropriated and fraudulently diverted" by some of the corrupt Malaysian officials, said Malaysia's attorney general, Tommy Thomas, in a statement.  

Unusually high fees were given to the bank for their work on the Malaysian fund and employees and directors "received large bonuses and enhanced career prospects" as rewards for their wrongful actions, Thomas wrote.
All allegations against it have been denied by Goldman Sachs.
"We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case," Goldman Sachs said in a statement quoted by MarketWatch.
The news resulted in a noticeable drop in the shares of Goldman Sachs.
In 2009, the state investment fund was created by Malaysia's former Prime Minister Najib Razak and is known as the 1Malaysia Development Berhad or 1MDB. The aim of creating the fund was to promote global investment in Malaysia.
Media reports quoting court records claims that the charges comprises of the fraudsters redirecting billions of dollars from the fund for purchasing luxury assets — some of which are located in the U.S. while some of the money was directly transferred to the accounts under the control of Najib and his family or his business and political associates. The fund had incurred debts of about $11 billion.
There are a number of countries, including the United States, that are investigating the financial misconduct.
In 2015, the fraud was brought to light by leaked documents and investigations by journalists. However, all further investigations against the dealings in the fund were stopped by Najib for the next three years till he remained in power.
However, in May this year, he lost the elections and shortly after that, the residence of Najib was raided by the police who recovered cash, jewelry and designer handbags. He was ultimately arrested in the case a few months later and charged with money laundering.