Malaysia charges 17 Goldman Sachs figures over 1MDB scandal

Malaysia charges 17 Goldman Sachs figures over 1MDB scandal”

Goldman Sachs (NYSE:GS) fell in midday trade on Friday after reports that 17 current and former bankers, including its CEO of its worldwide division, were criminally charged by Malaysia for their involvement in the 1Malaysia Development Berhad scandal.

Goldman Sachs has been under scrutiny for its role in helping to arrange $6.5 billion through bond offerings for Malaysian state fund, the 1Malaysia Development Berhad (1MDB).

Last year, Malaysia filed criminal charges against Goldman Sachs and two of the USA bank's former employees in connection with 1MDB.

In the filings issued on Friday, Malaysian Attorney General Tommy Thomas said the executives mentioned in the document should be held responsible for the U.S. bank's role in the scheme.

"We believe the charges announced today, along with those against three Goldman Sachs entities announced in December a year ago, are misdirected and will be vigorously defended", a Goldman spokesman said in a statement.

Richard Gnodde, who leads the bank's global business in London, as well as Canadian business executive Michael Evans, a former Goldman Sachs Asia chief who is now the president of Chinese e-commerce giant Alibaba, were among those charged on Friday.

He added that custodial sentence and criminal fines will be sought against the 17 Goldman Sachs directors accused under Section 367 (1), for their participation in the issuance as arrangers, structure agents, underwriters and sellers of the three 1MDB bonds.

Najib set up 1MDB when he took office in 2009, but it accumulated billions in debts and United States investigators allege at least $4.5bn was stolen from the fund and laundered by Najib's associates.

Prime Minister Mahathir Mohamad re-opened investigations into the 1MDB affair past year after defeating Najib at the polls, in large part due to public anger at the scandal, and pressure has been steadily mounting on the bank since.

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Goldman Sachs did not immediately respond to a request for comment. His wife and stepson also have charged in the case.

In December, Malaysia filed charges against Goldman Sachs and its former bankers, Tim Leissner and Roger Ng.

Low has been described by Malaysian and US authorities as the central player in the 1MDB scandal.

It has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of transaction proceeds.

Malaysia has said it was seeking up to US$7.5 billion in reparations from Goldman over its dealings with 1MDB, set up in 2009 by then prime minister Najib Razak.

The new charges escalate the Malaysian investigation into the bank for its role in one of the largest global embezzlement scandals.

Jho Low, a former 1MDB employee who became the face of the scandal, also faces criminal charges.

Leissner has already pleaded guilty in America, while Ng was extradited to the U.S. from Malaysia in May and pleaded not guilty.

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