Can M'sia take criminal action against Goldman Sachs?

Opinion  |  P Gunasegaram
Published:  |  Modified:

QUESTION TIME | Malaysia can take criminal action against Goldman Sachs, which arranged all of 1MDB’s dollar-denominated bonds, following criminal indictments by the United States Department of Justice (DOJ) against one of its former senior bankers and the guilty plea of another, in addition to an indictment against 1MDB-linked financier Low Taek Jho.

Such criminal action would pave the way not only for civil action and for the return of some US$600 million (RM2.4 billion) in fees paid to Goldman Sachs, but for even greater claims – as much as US$2.7 billion (RM10.8 billion), the amount of money the DOJ claimed was stolen and laundered – if it is established that the US bank was complicit in criminal activities and negligent in terms of its obligations as financial adviser to 1MDB.

In all, Goldman Sachs raised US$6.5 billion (RM26 billion) via three bond issues for 1MDB. If this includes the return of fees, the total claimed could be as high as RM13.2 billion (RM10.8 billion plus RM2.4 billion) or more.

Under a three-count indictment against Low and another Malaysian, Ng Chong Hwa (Roger Ng, formerly a managing director of Goldman Sachs), the DOJ said they conspired to launder billions of US dollars embezzled from 1MDB, and conspired to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Abu Dhabi officials.

As part of the indictment, Ng is also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of Goldman Sachs, which underwrote US$6.5 billion in bonds issued by 1MDB in three separate bond offerings in 2012 and 2013.

Ng was arrested in Malaysia, pursuant to a provisional arrest warrant issued at the request of the US. Low remains at large.

Also unsealed at the same time was the guilty plea of Tim Leissner, 48, the former Southeast Asia chair and participating managing director of Goldman Sachs, to a two-count criminal information charge of conspiring to launder money and conspiring to violate the FCPA, by paying bribes to various Malaysian and Abu Dhabi officials and circumventing the internal accounting controls of Goldman Sachs...

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