Chris Jung | NurPhoto | Getty Images
Logo of 1MDB (1Malaysia Development Berhad) on a bus window in Kuala Lumpur, Malaysia.
Goldman Sachs is fighting back against criminal charges from the Malaysian government, saying it was the victim of deceptive Malaysian officials in a scandal that has rocked the bank’s shares this year.
The bank was criminally charged Monday by Malaysian authorities for its role in creating the state investment fund known as 1MDB. It’s the first time the bank itself faces criminal charges for 1MDB, a $6.5 billion fund whose contents were plundered by a disgraced Malaysian financier and others. Malaysian officials are demanding at least $3.3 billion from Goldman Sachs for the episode.
“Certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of proceeds from these transactions,” the New York-based bank said in a statement.
“1MDB, whose CEO and board reported directly to the Prime Minister at the time, also provided written assurances to Goldman Sachs for each transaction that no intermediaries were involved. Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest. These charges do not affect our ability to conduct our current business globally.”
The “intermediary” may be Malaysian financier Low Taek Jho, known as “Jho Low,” who has been accused of laundering billions of dollars embezzled from the state investment fund 1MDB.
Goldman appears to be going on the offensive amid increasing pressure on the firm’s shares. The bank has plunged 34 percent this year, the worst among its big bank peers, thanks to negative headlines tied to the 1MDB scandal. The bank could face up to $5 billion in costs tied to 1MDB in a worst case-scenario, as well as another 18 months of overhang, bank analyst Mike Mayo said Monday in a research note.
Be the first to comment