Malaysian investigators have been urged to zoom in on 1MDB’s bond issuance made in 2012 and 2013 which were handled by Goldman Sachs at exorbitant fees.

Petaling Jaya MP Tony Pua urged this after a top executive with the bank, who had since left the firm, was subpoenaed by the US’ Federal Bureau of Investigation (FBI) in its probe into 1MDB.

“Despite the fact that the Malaysian government and taxpayers are the biggest victims to the astronomical fee paid to Goldman Sachs, it is the US investigators who have found basis to investigate the above transactions for possible scam, conspiracy and international money-laundering.

“It is a disgrace that the Royal Malaysian Police have completely failed to carry out any extensive investigation and the above incredulous transactions.

“The attorney-general and the inspector general of police must expedite investigations on 1MDB’s US$6.5 billion bond deals with Goldman Sachs in the light of Tim Leissner being subpoenaed by the FBI.

“The failure of the attorney-general and inspector-general of police to take quick and effective action against such crimes has led to the government carrying out a multi-billion bailout of 1MDB with emergency loans, cheap land sales and preferred contracts at the expenses of the tax payers,” he said in a statement today.

According to Bloomberg, prosecutors in the US Justice Department’s kleptocracy asset-recovery unit are investigating whether funds were embezzled from 1MDB by politically-connected people in Malaysia.

It said the investigation is being led by the FBI’s New York office, which is trying to determine if any US laws was broken.

Prior to the investigation, Pua was among the earliest MPs to have expressed concern over the 1MDB bond issuance at what he claimed were at exorbitant cost.

“1MDB had via three international bond issuance exercise, raised US$1.75 billion, US$1.75 billion and US$3 billion in May 2012, October 2012 and March 2013 respectively.

“The investment bank which also acted as the underwriter of the bonds was Goldman Sachs. The above bond issuance stunk to high heavens because of the abnormal and exorbitant ‘certain commissions, fees and expenses’ which were paid to Goldman.

“For example, 1MDB paid US$196 million and US$283 million for the ‘certain commissions, fees and expenses’ to raise US$1.75 billion and US$3 billion respectively.

“These amounts worked out to a staggering 11.2 percent and 9.4 percent of the funds raised,” said Pua.

In contrast, he said local companies Tenaga Nasional and Penerbangan Malaysia Berhad were able to raise US$350 million and US$1 billion by paying only 2 percent and 0.5 percent in fees and expenses respectively.

He added that even Goldman Sachs fund-raising exercise for other Malaysian entities was substantially cheaper as the firm charged Sarawak government subsidiary Equisar International Inc 1.3 percent in fees.

“For similarly-sized issues, the Mexican and Uruguayan governments successfully issued bonds amounting to US$3.9 billion and US$2.0 billion by deducting only 0.2 percent and 0.1 percent for fees and expenses respectively.

“How could it be possible that Malaysia as a country is 100 times less credit-worthy than the Uruguayan government?” he said.