Goldman Sachs shares hit as 1MDB fallout continues

Malaysia was `cheated' by Goldman Sachs, Mahathir says - The Jakarta Post

Malaysia was `cheated' by Goldman Sachs, Mahathir says - The Jakarta Post

Based on the reports, the U.S. prosecutors have filed a report against two former bankers of Goldman Sachs earlier this month (November).

Leissner and Ng have been charged with money-laundering and conspiring to bribe officials in Malaysia and Abu Dhabi to hire Goldman for lucrative consulting contracts. The bank arranged three bond deals in 2012 and 2013 to fund 1MDB, raising $6.5 billion to supposedly attract foreign investment.

Goldman Sachs has said it believed proceeds of the debt it underwrote were for development projects and that Leissner withheld information from the firm.

"Obviously we have been cheated through the compliance by Goldman Sachs people", he said, without elaborating.

The 93-year-old added that the bank's compliance controls do "not work very well". 'It doesn't matter who - it may be Goldman Sachs, it may be whoever'. Leissner has said Goldman's culture of secrecy led him to hide wrongdoing from the company's compliance staff.

A Goldman Sachs spokesman in Hong Kong declined to comment on the interview.

"But the DoJ has promised that they will give back the money", he said.

Finance Minister Lim Guan Eng had said that Malaysia is seeking a full refund of all the fees paid for the 1MDB deals.

"The Malaysian government will want to reclaim all the fees paid, as well as all the losses including the interest rate differential", Lim told reporters.

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Port Dickson MP Anwar Ibrahim said with the USA having initiated legal action, Malaysia, too, should demand the return of US$600 million (RM2.4 billion) in commission that the bank received for its work with 1MDB.

Goldman's stock dropped 7.5 percent, to $206.05, bringing it to its lowest level since November 2016.

This follows further details regarding their dealings and level of involvement in the 1MDB scandal, where the US Department of Justice says about $4.5 billion was misappropriated.

Leissner pleaded guilty and has agreed to pay $43.7 million in restitution of ill-gotten gains.

Malaysian financier Low Taek Jho, described by U.S. and Malaysian authorities as central to the 1MDB scandal, was charged by United States prosecutors this month.

Records show that Low, who remains at large, isn't in China on a Malaysian passport as previously thought, Lim told the BFM radio station.

Bernstein analyst Christian Bolu estimates Goldman may see a "financial hit" of $600 million to $2 billion from the 1MDB scandal, which would be "meaningful", but "ultimately manageable for Goldman and well below" the $7 billion of lost market cap in the past two days. The firm said in a quarterly filing earlier this month that it couldn't predict the outcome of the US Justice Department's investigation, but said it could face "significant fines". Leissner said in his guilty plea unveiled on Friday that others at the bank helped him hide bribes used to retain business in Malaysia.

The Southeast Asian nation should also seek compensation from the bank for ruining Malaysia's image, Anwar said in parliament on Tuesday.

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