Malaysia has said it filed criminal charges against Goldman Sachs and two of the US bank’s former employees, in connection with a corruption and money-laundering probe at the state fund 1MDB.
Goldman Sachs has been under scrutiny for its role in helping raise funds through bond offerings for 1Malaysia Development Berhad (1MDB), which is the subject of investigations in at least six countries.
Malaysia’s Attorney General Tommy Thomas said criminal charges under the country’s securities laws were filed on Monday against Goldman Sachs, its former bankers Tim Leissner and Roger Ng, former 1MDB employee Jasmine Loo and financier Jho Low in connection with the bond offerings.
“The charges arise from the commission and abetment of false or misleading statements by all the accused in order to dishonestly misappropriate $2.7 billion from the proceeds of three bonds issued by the subsidiaries of 1MDB, which were arranged and underwritten by Goldman Sachs,” Thomas said in a statement.
In an emailed statement, a Goldman Sachs spokesman said “these charges are misdirected” and that the bank continues to cooperate with all authorities in their investigations, Reuters news agency reported.
The bank has consistently denied wrongdoing.
The 1MDB scandal refers to a money laundering and bribery scheme that pilfered billions of dollars from a Malaysian investment fund set up in 2009 by former Prime Minister Najib Razak to promote economic development in the Southeast Asian nation.
The scale of scandal led to Najib’s defeat in a general election in May, the first change in government in six decades. Najib is now facing criminal charges in Malaysia with his trial due to start next year.
The US Department of Justice (DOJ) has said about $4.5bn was misappropriated from 1MDB, including some money that Goldman Sachs helped raise, by high-level officials of the fund and their associates from 2009 through 2014.
Thomas said prosecutors will seek fines against the accused “well in excess” of the allegedly misappropriated $2.7bn bond proceeds plus $600 million in fees received by Goldman Sachs.
Malaysia will also seek jail terms of up to 10 years for each of the individuals accused, Thomas said.
“Having held themselves out as the pre-eminent global adviser/arranger for bonds, the highest standards are expected of Goldman Sachs. They have fallen short of any standard,” Thomas said.
Low has said he is innocent. A spokesman did not immediately respond to a request for comment.
Loo, against whom Malaysia brought other 1MDB related charges this month, has not commented on the 1MDB case and her whereabouts are unknown.
Lawyers for Leissner and Ng could not be reached immediately, according to Reuters.
US prosecutors filed criminal charges against Leissner and Ng last month. Leissner pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act. Ng, detained in Malaysia, is facing extradition to the United States.
