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Malaysia Files Criminal Fraud Charges Against Goldman Sachs

In an unprecedented move that possibly foreshadows similar charges from the US DOJ – and lots of headaches for the “recently retired” Lloyd Blankfein – the Malaysian attorney general has filed criminal charges against Goldman Sachs – targeting two of the investment bank’s Asian subsidiaries and two former Goldman bankers who have already been charged by the US (former Southeast Asia head Tim Leissner and banker Roger Ng), accusing the investment bank of violating the country’s securities laws by lying in bond agreements for three deals that raised $6.5 billion for 1MDB, a Malaysian sovereign wealth fund formed under former Prime Minister Najib Razak that US authorities believe was looted for upwards of $4 billion by corrupt bankers and officials.

While authorities in Singapore, Switzerland and elsewhere had already filed criminal charges against various banks involved with the scandal last year, the first charges against Goldman and its employees over their involvement in the scandal materialized two months ago when the DOJ indicted Leissner and Ng.

Shortly after the indictments, media reports revealed that senior Goldman executives – most notably, former CEO Lloyd Blankfein – were involved with the transactions. Blankfein attended at least three meetings with either Razak or disgraced Malaysian financier Jho Low, the allegedly corrupt financier who was also indicted by Malaysian authorities on Monday, even inviting Low to a private sit down at Goldman’s 200 West Street headquarters. While pursuing the deal, Goldman employees – including Blankfein – brushed aside concerns raised by the bank’s compliance department, and allowed Low to function as an unofficial intermediary between the bank and the Malaysian government, despite the bank’s compliance department warning that Low was not to be trusted. The DOJ is also reportedly looking into the role of other senior Goldman bankers.

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