Shari'ah / Regulation

Malaysia files criminal charges against Goldman Directors involved in 1MDB

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The 17 current and former employees were directors of three Goldman Sachs units that Malaysia has accused of misleading investors when arranging $6.5 billion in bond sales for the state investment fund in 2012 and 2013.

Wednesday 14, August 2019

Malaysia expanded efforts to prosecute Goldman Sachs Group employees it alleges were involved in the 1Malaysia Development Bhd (1MDB) fraud, filing criminal charges against more than a dozen current and former senior executives based around the world, reported Bloomberg.

Vice-Chairman Richard J. Gnodde, who heads the Wall Street firm’s International Business in London and J. Michael Evans, a former partner at the US bank who is now president of Alibaba Group Holding, were among those named.

Other high-profile people charged include a former adviser to Margaret Thatcher and the bank’s chief risk officer.

The move appears to be a technical legal manoeuvre by the Malaysian government rather than the unearthing of new evidence tying the individuals to 1MDB dealings.

Attorney-General Tommy Thomas said that under Malaysian law, company directors and officers can be held accountable for crimes that occurred under their watch.

The charges mark an escalation of Malaysia’s campaign to recoup funds it says were embezzled from 1MDB. Law-enforcement agencies in the US and Singapore are also investigating the money trail for billions of dollars that were allegedly syphoned off.

Similarly, US prosecutors have charged two former bankers at Goldman Sachs, which received $600 million in fees for the bond sales.

Malaysian officials allege that the directors knowingly omitted facts in statements to investors. The country announced charges against the three Goldman Sachs entities in December, though prosecutors have struggled to serve those units.

Malaysia will seek custodial sentences and criminal fines against the individuals, Thomas said.

A Goldman Sachs spokesman, 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.”

Prime Minister Mahathir Mohamad has prioritised recouping funds believed to be lost through the troubled state fund, including seeking about $6.5 billion compensation from Goldman Sachs for its involvement in 1MDB. The premier said the bank had offered MYR 1 billion ringgit ($239 million), which he said was little compared with the huge killing that the bank made from the bond deals.

TAGS : 1MDB, Goldman Sachs Group, Prime Minister Mahathir Mohamad

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