Malaysia Charges Goldman Sachs for Role in 1MDB

Published: 17 December 2018

Goldman Sachs Office at 200 West Street (From: Wikimedia Commons)The Goldman Sachs offices at 200 West Street, New York (From: Wikimedia Commons)

By Jelter Meers

The Attorney General of Malaysia filed criminal charges on Monday against three former Goldman Sachs employees and a 1Malaysia Development Bhd worker for arranging false bonds to misappropriate US$2.7 billion.

Goldman Sachs arranged and underwrote three bonds with a total face value of $6.5 billion between 2012 and 2013, Malaysia’s Attorney General Tommy Thomas said in a press release.

The four individuals are accused of bribing Malaysian public officials “in order to procure the selection, involvement and participation of Goldman Sachs in these Bond issuances.”

“Goldman Sachs benefited by receiving, underwriting and arranging fees of approximately US$600 million which was several times higher than the prevailing market rates and industry norms,” Thomas said.

The three employees and directors who allegedly created the bonds then received large bonuses and “enhanced career prospects.”

“Their fraud goes to the heart of our capital markets, and if no criminal proceedings are instituted against the accused, their undermining of our financial system and market integrity will go unpunished,” Thomas said.

Besides facing possible fines “well in excess” of the billions they allegedly misappropriated, the four individuals might be imprisoned up to 10 years.

“Having held themselves out as the pre-eminent global adviser/arranger for bonds, the highest standards are expected of Goldman Sachs,” Thomas said. “They have fallen short of any standard. In consequence, they have to be held accountable.”