Goldman Sachs’ Malaysian trial over 1MDB scandal moved to higher court

Goldman’s units are accused of misleading investors when arranging US$6.5 billion of bond sales, knowing the funds would be misused

Malaysian finance minister Lim Guan Eng has previously rejected Goldman’s apology and called for US$7.5 billion in reparations from the bank

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Goldman Sachs is reportedly in talks with authorities in Malaysia and the US in a bid to put the 1MDB scandal behind it. Photo: AP

Published: 3:00pm, 16 Dec 2019Updated: 11:45am, 17 Dec 2019

Two Goldman Sachs units facing criminal charges for their alleged role in the 1Malaysia Development Berhad (1MDB) scandal on Monday had their cases moved to a higher court in Malaysia.

The High Court on Monday approved the transfer from the Magistrate’s Court for the charges against Goldman Sachs (Asia) LLC and Goldman Sachs International (UK). The petition to transfer the case against a third unit, Goldman Sachs (Singapore), is still pending and will be reviewed at another hearing on December 26.

Malaysia’s Attorney-General’s Chambers told prosecutors to transfer the case to a higher court in September without specifying the reasons, though normally such a move relates to the seriousness of the case. Goldman’s units are accused of misleading investors when arranging US$6.5 billion of bond sales for troubled state fund 1MDB while allegedly knowing the funds would be misused.

The US bank is said to have been in talks with authorities in Malaysia and the US in a bid to put the 1MDB scandal behind it. Negotiators for the Southeast Asian country have discussed figures of around US$2 billion to US$3 billion in talks with the Wall Street bank, Bloomberg reported in October.

At the same time, the country’s top prosecutor Tommy Thomas has said Malaysia has a strong case against Goldman and will not be dropping the charges.

The transfer to the High Court of the case against the Goldman Singapore unit was delayed as the summons received by the US bank did not include all the charges, Deputy Public Prosecutor Aaron Paul Chelliah said on Monday.

Najib Razak, Malaysia’s former prime minister, leaves court in Kuala Lumpur. Photo: Bloomberg

Malaysia’s former prime minister Najib Razak, who founded and chaired 1MDB, has been charged with dozens of counts of criminal breach of trust, money laundering and abuse of power. He faces multiple criminal trials and is currently free on bail of 6 million ringgit (US$1.4 million). Since his arrest on July 3, 2018, Najib has repeatedly maintained his innocence.