Goldman Sachs could face hefty penalties over alleged UAE, Malaysia 'bribes' to secure 1MDB deals

Goldman Sachs could face hefty penalties over alleged UAE, Malaysia 'bribes' to secure 1MDB deals
Banking firm Goldman Sachs has acknowledged that it could be hit with severe penalties over bribes allegedly made by former senior officials.
3 min read
06 November, 2018
Malaysian politician Anwar Ibrahim has said

Global investment banking firm Goldman Sachs has acknowledged that it could face "significant penalties" related to a scandal over funds from Malaysia's sovereign wealth fund, known as 1MDB.

It follows US prosecutors' revealing the charges made against at least three senior, current and former, Goldman Sachs employees last week, including one who confessed to bribing officials in Malaysia and the UAE to secure bond deals for Goldman.

The Wall Street Journal reported that in the firm's third-quarter earnings report's filing to regulators, it acknowledged that it could potentially be hit with  "significant penalties resulting from 1MDB, but said it was also cooperating with investigators".

Fugitive Malaysian financier Jho Taek Low allegedly conspired with former Goldman bankers Roger Ng and Tim Leissner to bribe government officials.

According to the filing, former Goldman bankers Tim Leissner and Roger Ng had "circumvented the firm's internal accounting controls, in part, by intentionally deceiving control personnel and internal committees", the WSJ reported.

The pair allegedly conspired with fugitive Malaysian financier Jho Taek Low, who has been named as Malaysia's "most wanted man", to carry out the deal.

Goldman allegedly received nearly US$600 million in fees from the 1MDB deal.

The 1MDB scandal led to electoral defeat for
former prime minister Najib Razak [AFP]

It has also been reported by the Financial Times that up to 30 Goldman employees reviewed the 1MDB deal's approval process.

Malaysia's prime minister-in-waiting Anwar Ibrahim said on Tuesday that it would be "inexcusable" if Goldman Sachs is found to have been complicit in the 1MDB scandal.

"We are talking about $600 million of commission. They (Goldman Sachs) must understand (that) to be complicit to the excesses and crime is inexcusable," Anwar told Bloomberg.

"We must get hold of every cent that had been taken out from the country, by either the leaders or those complicit in this action," he added.

Low, Ng and Leissner were indicted by the US Department of Justice on Thursday for conspiring to launder money and violating the Foreign Corrupt Practices Act in relation to 1MDB.

Leissner pleaded guilty to conspiring to launder money and to violating anti-bribery laws, and was ordered to forfeit $43.7 million.

The 1MDB scandle has shaken Malaysia's political landscape and led to electoral defeat for former prime minister Najib Razak in May. Najib currently faces dozens of corruption charges and is being investigated over multi-million dollar assets and transfers he says were gifts and donations from Gulf royalty.

In 2016, the DoJ reportedly recovered over $1 billion in assets that were allegedly purchased with stolen 1MDB funds and sought the forfeiture a Bombardier private jet, a Manhattan penthouse, a Beverly Hills mansion and paintings by Vincent Van Gogh and Claude Monet.

The justice department is also investigating the wherabouts of a missing $27 million 22-carat diamond pendant that was given to Najib. Earlier this month, Najib claimed that the pendant was a gift from Emirati prince Sheikh Mansour, during a heated interview with Al-Jazeera.

The former leader also backtracked on an earlier claim that a transfer of over $600 million into his personal bank account was a donation from Saudi royalty, saying that he could not verify the source of the funds.