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Malaysia Files Criminal Charges Against Goldman Sachs Over 1MDB Scandal Malaysia Files Criminal Charges Against Goldman Sachs Over 1MDB Scandal
(about 4 hours later)
HONG KONG — Malaysia filed criminal charges against three subsidiaries of Goldman Sachs on Monday, accusing the Wall Street bank of making false and misleading statements. HONG KONG — Malaysia filed criminal charges against Goldman Sachs on Monday, accusing the giant Wall Street bank of making false and misleading statements
The Malaysian authorities also charged several individuals in connection to a multibillion-dollar international scandal, which has ensnared Goldman and led to the ouster of Malaysia’s former prime minister, Najib Razak. The charges are a rare international rebuke of an institution that has long represented the pinnacle of money and power. The 149-year-old investment bank already faces mounting pressure in the United States, where two former bankers face charges of bribery and money laundering related to its business in Malaysia.
The government said it would seek criminal fines in excess of $2.7 billion related to the charges. The Malaysian authorities also charged several individuals in connection with the multibillion-dollar international fraud scandal that ensnared Goldman and that led to the ouster of Malaysia’s former prime minister, Najib Razak. The government said it would seek criminal fines in excess of $2.7 billion related to the charges.
“We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case,” said Edward Naylor, a Goldman spokesman in Asia, in an emailed statement. “The firm continues to cooperate with all authorities investigating these matters.” Goldman is cooperating with the authorities in both countries, Edward Naylor, a Goldman spokesman in Asia, said in an emailed statement. “We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case,” he said.
The charges relate to a state investment fund called 1Malaysia Development Berhad, or 1MDB, from which, investigators say, officials and employees siphoned into personal accounts. Goldman helped the fund to raise billions of dollars, in turn earning $600 million in fees for the bank. The charges announced on Monday relate to a Malaysian state investment fund called 1Malaysia Development Berhad, or 1MDB, from which officials and employees are suspected of siphoning money into personal accounts. Goldman helped the fund raise $6.5 billion through a series of bonds, in turn earning $600 million in fees in 2012 and 2013.
Among those charged were Timothy Leissner, a former Goldman investment banker;, a former 1MDB employee; and Jho Low, a flamboyant Malaysian financier who United States investigators say masterminded the scheme. Mr. Leissner pleaded guilty in August to taking part in the bribery and money laundering scheme, according to United States prosecutors. Roger Ng, another Goldman banker, will be charged soon, the Malaysian government said. Mr. Ng and Mr. Low were also charged by the United States in November. The money funded an enormous spending spree by business executives and officials that included diamonds and other jewels, Birkin bags, Picassos and a Monet, as well as Hollywood films like “The Wolf of Wall Street,” according to federal prosecutors in the United States.
The charges on Monday were filed under the country’s national securities law, according to a statement from Attorney General Tommy Thomas. Among those charged on Monday were Timothy Leissner, a former Goldman investment banker; the former 1MDB employee Jasmine Loo Ai Swan; and Jho Low, a flamboyant Malaysian financier who United States investigators say masterminded the scheme.
Goldman has “fallen far short of any standard,” said Mr. Thomas in a statement. He added, “they have to be held accountable.” Mr. Low’s lawyers said in a statement that he was innocent and that he would not travel to places “where guilt has been predetermined by politics.”
“It is clear that Mr. Low cannot get a fair trial in Malaysia, where the regime has proven numerous times that they have no interest in the rule of law,” the statement said. Mr. Low is believed to be in China, though his exact location is not known.
Mr. Leissner already pleaded guilty in August in the United States to taking part in the bribery and money laundering scheme. Roger Ng, a former Goldman banker who left the company in 2014, will be charged soon, the Malaysian government said. Mr. Ng was arrested in Malaysia and is currently fighting extradition to the United States. He could not be immediately reached on comment.
United States prosecutors unveiled Mr. Leissner’s guilty plea and the bribery and money laundering charges against Mr. Ng and Mr. Low in November, in a move that caught Wall Street by surprise. Few senior bank employees have been charged since the financial crisis. The criminal charges have added pressure on the bank just months after David Solomon took the helm, in October.
Lloyd Blankfein, Goldman’s chairman, sought to distance senior management from the scandal in a brief interview in November, saying that the scheme was the work of rogue employees who “evaded our safeguards, and lie.”
The latest criminal charges brought by Malaysia could complicate any argument by Goldman that its dealings with 1MDB were the fault of rogue bankers.
The charges on Monday were directed at three subsidiaries of Goldman Sachs, including its British subsidiary, Goldman Sachs International, according to the charging documents filed by Attorney General Tommy Thomas.
Goldman misled potential investors in its marketing materials for 1MDB bonds in violation of Malaysia’s securities laws, Mr. Thomas said. Goldman benefited from its work with 1MDB and received fees that were “several times higher than the prevailing market rates,” he added. Those fees in turn led to fat bonuses and increased the bank’s ranking in Asia.
Goldman has “fallen far short of any standard,” Mr. Thomas said in a statement. “They have to be held accountable.”
In the United States, federal prosecutors continue to investigate other Goldman bankers and the company itself. Their court filings reveal an elaborate scheme to cover up kickbacks and fees to secure business that involved shell companies in different jurisdictions. In each of the three bond issuances that Goldman undertook for 1MDB, Mr. Low provided directions on who to bribe in order to secure contracts, according to filings.
In several internal emails, Goldman bankers referred to “Project Tiara.” When Malaysian authorities seized assets that they said had been bought with stolen 1MDB money, they found 14 diamond tiaras.
But the huge sums of money that were stolen bought much more than tiaras, including a $250 million yacht, a $35 million Bombardier jet and a see-through grand piano that is currently sitting in the living room of the supermodel Miranda Kerr.