Mon Dec 17, 2018, 11:58 AM

Goldman Sachs Faces First Criminal Charges in 1MDB Scandal

Malaysia turned up the heat on Goldman Sachs Group Inc., filing the first criminal charges against the U.S. bank in relation to the 1MDB scandal.

Authorities alleged that Goldman misled investors when the bank knew that proceeds from 1MDB bond sales it arranged would be misappropriated. The government is seeking fines well in excess of both the $2.7 billion of allegedly misused funds and the $600 million in fees received by Goldman on the deals. Goldman has blamed rogue employees for any wrongdoing in relation to 1MDB, a state-owned investment fund.

“Their fraud goes to the heart of our capital markets,” Malaysian Attorney General Tommy Thomas said in a statement in announcing the charges on Monday. “If no criminal proceedings are instituted against the accused, their undermining of our financial system and market integrity will go unpunished.”

Goldman Sachs’s role raising about $6.5 billion for 1MDB in 2012 and 2013 has evolved into its thorniest scandal since the global financial crisis a decade ago triggered a public backlash against banks. Former Goldman partner Tim Leissner has pleaded guilty to U.S. bribery charges and his former deputy, Roger Ng, was arrested in Malaysia. It put a third Asian executive on leave.

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