In 2015, a scandal involving the state-owned 1Malaysia Development Berhad fund brought down the country's authoritarian government, amid allegations that the disgraced ex-Prime Minister Najib Razak and his retinue embezzled $4.5 billion from the fund.
The new, progressive government has been aggressively pursuing the fraudsters; it had previously secured criminal convictions against Goldman-Sachs bankers and the "tabloid party boy" Jho Low, who is now a fugitive believed to be in China.
Now the government has accused Goldman Sachs of criminal complicity in the scandal. Goldman Sachs denies culpability, saying that they believed the prime minister and his officials when they told Goldman Sachs's compliance department that what they were doing was legal.
Goldman Sachs shares dropped 2.8% on the news. If convicted, Goldman Sachs would have to refund the $600m it charged the scammers in fees and pay fines.
This is the first time Goldman Sachs, which has consistently denied wrongdoing, has faced criminal charges in the 1MDB scandal.
"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," Goldman spokesman Michael DuVally 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," DuVally said.
Goldman Sachs fires back after Malaysia charges bank in 1MDB probe
(via Naked Capitalism)
