Goldman says former Malaysia government lied, after charges over 1MDB filed

KUALA LUMPUR, Dec 18, 2018, AFP. Goldman Sachs on Tuesday (Dec 18) accused the former Malaysian government and state fund 1MDB of lying to the bank, after Kuala Lumpur charged the Wall Street titan over a massive financial scandal, reported The Straits Times.

Malaysia’s attorney-general Monday filed criminal charges against the US bank and two of its former employees over the alleged looting of 1Malaysia Development Berhad (1MDB).

Billions of dollars were allegedly stolen from the fund and used to buy everything from yachts to artwork, in an audacious fraud that involved former Malaysian leader Najib Razak and contributed to his government’s shock defeat at May elections.

Goldman has faced mounting questions about its role as the bank helped 1MDB raise US$6.5 billion through a series of bond issues.

Monday’s charges allege the bank’s subsidiaries and the two former bankers, working with a shadowy Malaysian financier, misappropriated US$2.7 billion, bribed officials and gave false statements as they helped 1MDB to raise the cash.

But Goldman said in a statement that “certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of proceeds from these transactions”.

“1MDB, whose CEO and board reported directly to the prime minister at the time, also provided written assurances to Goldman Sachs for each transaction that no intermediaries were involved,” it said.

The international legal assault on Goldman intensified, with prosecutors in Malaysia filing criminal charges against the bank on Dec 17.

The Malaysian financier named in the charges, Low Taek Jho, allegedly masterminded the fraud and had huge influence over 1MDB but held no official positions at the fund.

He has been hit with several rounds of charges but maintains his innocence.

The former Goldman bankers named in the charges are Tim Leissner, who worked as South-east Asia chairman and managing director at Goldman, and Ng Chong Hwa, a managing director at the bank.

The bank added that it was “not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest”.

Malaysian authorities are seeking fines above the US$2.7 billion allegedly misappropriated from the bond issues as well as the US$600 million Goldman earned in fees, and long jail terms for those accused.

As well as Leissner, Ng and Low, Malaysian authorities charged former 1MDB employee Jasmine Loo Ai Swan.

The bank’s shares fell 2.7 per cent on Monday after the charges were announced.

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