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

Malaysia 1MDB scandal

Bloomberg

Published: 3:00pm, 16 Dec 2019

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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 hunt for Jho Low: is net closing on 1MDB’s billion-dollar whale?

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.

Malaysian authorities seized cash and luxury goods worth up to US$273 million from properties linked to Najib, but he claims the funds were donated to him by Saudi Arabia’s royal family and that the items were mostly gifts to his wife and daughter.

Najib bought wife US$130,000 Chanel watch to ‘make up for shortened holiday’

Financier Low Taek Jho, also known as Jho Low, is accused of masterminding the fraud. Low has gone into hiding but is wanted by several countries. He has denied any wrongdoing.

Among the items of property linked to Jho Low that have been forfeited are: the yacht Equanimity, which has since been sold to the casino operator Genting for US$126 million; a penthouse in the Time Warner building in New York, worth US$31 million; a mansion in Los Angeles worth US$39 million; and a bungalow in Penang, Malaysia worth US$11.7 million.

The various 1MDB trials have heard that Low referred to Najib as “Optimus Prime” in some correspondences; Low allegedly referred to himself as ‘FL’ in some chats, apparently a shorthand for the Cantonese expression “Fei Lou”, or Fat Boy.

Goldman Sachs CEO David Solomon has apologised to Malaysia for the role played by ex-employee Tim Leissner in the scandal. Leissner, a former partner for Goldman Sachs in Asia, pleaded guilty in the US to conspiring to launder money and violate the Foreign Corrupt Practices Act.

Malaysia ‘won’t go to war’ with country hosting Jho Low, says Mahathir

Malaysian finance minister Lim Guan Eng rejected the apology and called for US$7.5 billion in reparations from the bank. Roger Ng, another former Goldman Sachs employee, has also been charged.

Anwar Ibrahim, who is expected to succeed Mahathir Mohamad as prime minister, said Goldman must be held accountable for its role in the 1MDB scandal. Both Mahathir and the would-be prime minister have presented a united front to the public in Malaysia’s anti-corruption drive.

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