The subsidiaries of the Wall Street banking giant and its former key employees, ex-chairman of Goldman's South East Asia, Tim Leissner, and ex-managing director, Roger Ng, are accused of giving false statements when helping to arrange bonds for 1MDB, Malaysia's Attorney General Tommy Thomas announced on Monday.
Malaysia says the accused wanted to misappropriate $2.7 billion from $6.5 billion in bonds, issued by 1MDB and underwritten by Goldman Sachs, in three separate offerings between 2012 and 2013.
Malaysia also filed charges against former employee of 1MDB Jasmine Loo Ai Swan and local financial Low Taek Jho, also known as Jho Low, who maintains his innocence. The prosecution believes the duo conspired with Leissner and Ng to bribe officials in order to procure the selection, involvement and participation of Goldman Sachs in these bond issuance's.
Now Kuala Lumpur is seeking to take back the misappropriated $2.7 billion from Goldman Sachs as well as $600 million in fees received by the bank. The prosecution is demanding fines and up to 10 years behind bars for each of the accused. The fines may amount to at least 1 million ringgit ($240,000), according to the charge sheets seen.
Billions of dollars from the Malaysian fund were reportedly used to buy everything from Beverly hills mansions, yachts and private jet to artworks among other things in a fraud that allegedly involved former Malaysia Prime Minister Najib Razak.
As Malaysia brought the charges, the bank hit back, claiming that it was the victim of deceptive Malaysian officials. The long-running scandal has already rocked the bank's shares this year, which dropped more than 30 percent.
"Certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and other about the use of proceeds from these transactions," Goldman said in a statement cited by media. It added that the charges have no effect on its "ability to conduct our current business globally."
Analysts warn that the scandal is just the tip of the iceberg of the bank's "criminal" deeds. Despite being investigated in several countries, including in the US, no matter the crimes, Goldman chiefs will never go to jail as they are too close to both sides of the US political aisle, Jack Rasmus, professor of political economy at St. Mary's College told the media. He also warned that the bank is driving the world to the next financial crisis.
"They just haven't been caught in the other places," Rasmus said in an interview. "We're on the verge of another financial crisis that will make the last one pale in comparison and Goldman Sachs and businesses like them are at the center of the cause of this."
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