Wall Street Journal: Malaysia Charges Goldman Sachs

The Malaysia Development Berhad, known as 1MDB, was set up by Malaysia’s former prime minister in 2009 to improve the country through strategic investing. Reports soon emerged of missing finance payments and funds diverted into personal accounts. “Goldman arranged $6.5 billion in bonds for 1MDB in 2012 and 2013, of which $2.7 billion was allegedly stolen,” reports Tom Wright for the Wall Street Journal. “The bank made $600 million in profits. The 1MDB fund is now the center of global investigations led by the U.S. Justice Department and including authorities in Malaysia, Singapore, Switzerland and Luxembourg.” Malaysia, now under a new prime minister, has filed criminal charges against units and a former partner of Goldman Sachs, a major US investment bank, suggesting that 2012 and 2013 offering documents for international bonds included false information. Others charged in the scandal may be in China. – YaleGlobal

Wall Street Journal: Malaysia Charges Goldman Sachs

Malaysia files criminal charges against US investment bank Goldman Sachs units and former partner, alleging misappropriation of $2.7 billion from 1MDB
Tom Wright
Tuesday, December 18, 2018

The Wall Street Journal: Malaysian authorities on Monday filed criminal charges against Goldman Sachs Group Inc. units and a former partner of the bank in connection with the 1MDB financial scandal, the country’s attorney general said. Goldman Sachs International and two Asian subsidiaries of the Wall Street bank were charged under securities laws for the omission of material information and publishing of untrue statements in offering documents in 2012 and 2013 for the sale of international bonds by state investment fund 1Malaysia Development Bhd., or 1MDB. “We believe these charges are misdirected, 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,” Goldman said.

Malaysia’s attorney general also filed charges against Tim Leissner, a former Goldman partner, under securities laws. Mr. Leissner pleaded guilty in criminal charges made public by the U.S. Justice Department in November to misappropriating 1MDB money and bribing officials in Malaysia and Abu Dhabi. His sentencing is expected early next year. Mr. Leissner wasn’t immediately available for comment.

Goldman arranged $6.5 billion in bonds for 1MDB in 2012 and 2013, of which $2.7 billion was allegedly stolen. The bank made $600 million in profits. The 1MDB fund is now the center of global investigations led by the U.S. Justice Department and including authorities in Malaysia, Singapore, Switzerland and Luxembourg.  “Malaysia considers the allegations in the charges against the accused to be grave violations of our securities laws, and to reflect their severity, prosecutors will seek criminal fines against the accused well in excess of the $2.7 billion misappropriated from the bonds proceeds and $600 million in fees received by Goldman Sachs , and custodial sentences against each of the individual accused: the maximum term of imprisonment being 10 years,” the attorney general’s statement said.

The attorney general also filed charges against Jho Low, the alleged mastermind of the 1MDB scheme, and Jasmine Loo, a former 1MDB counsel. Both already have been charged in absentia by Malaysian authorities with money laundering and other offenses. The Justice Department also indicted Mr. Low with money-laundering and other charges. The whereabouts of Mr. Low and Ms. Loo are unclear, but Malaysian authorities believe Mr. Low is living in China. Another former Goldman executive, Roger Ng, a Malaysian citizen, is in detention in Kuala Lumpur and is expected to be charged later this week. Attempts to reach Mr. Ng, who is fighting extradition to the U.S., weren’t successful.

Tom Wright is a reporter for the Wall Street Journal.

© 2018 Dow Jones & Company Inc. Reprinted with permission.

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