KUALA LUMPUR (Reuters) - Goldman Sachs Group Inc
Malaysia on Monday filed the charges in Kuala Lumpur against three Goldman Sachs units in connection with the bank's role as underwriter and arranger of three bond sales that raised $6.5 billion for 1MDB.
The charges were the first criminal action against the bank over its involvement in the scandal, which the U.S. Justice Department has estimated involved the misappropriation of $4.5 billion by high-level 1MDB fund officials and their associates between 2009 and 2014.
Malaysian authorities charged the Goldman units as well as former Goldman partner Tim Leissner, 1MDB employee Jasmine Loo and Jho Low, the Malaysian financier believed to be at the heart of the scandal, as part of their investigation into suspected corruption and money laundering at 1MDB, founded by former Malaysian prime minister Najib Razak.
The alleged crimes carry penalties of up to 10 years in prison and fines of at least 1 million ringgit ($240,000), according to the charge sheets, seen by Reuters.
Goldman Sachs has consistently denied wrongdoing and on Tuesday maintained that certain members of the former Malaysian government and 1MDB lied to the bank about the proceeds of the bond sales.
In a statement responding to the Monday news, the bank added: “Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest. These charges do not affect our ability to conduct our current business globally.”
Malaysia said on Monday it would seek from Goldman and the others the $600 million in fees Goldman received for the deal and the allegedly misappropriated $2.7 billion (2.14 billion pounds) bond proceeds.
The charges name Goldman Sachs (Asia) LLC, a key U.S.-registered unit of the bank, as well as London-based Goldman Sachs International and Goldman Sachs (Singapore) PTE. The bank's Kuala Lumpur-based unit has not been charged.
The charges claim Goldman omitted key facts on the fund's management - including the role of Low, who is described as the "operator and key intermediary for 1MDB".
The charges also claim Goldman made untrue statements about the planned use of proceeds from a $3 billion bond sold in 2013.
Low maintained his innocence on Monday following the fresh charges filed by Malaysia. His spokesman did not immediately respond to a request for comment on the allegations made in the charge sheet.
A lawyer for Leissner was not available for an immediate comment outside U.S. business hours.
Loo, against whom Malaysia brought other 1MDB-related charges earlier in December, has not commented on the 1MDB case and her whereabouts are not known. She could not be reached for comment.
On Monday, Malaysia said it would also charge Roger Ng, a former Goldman Sachs banker and colleague of Leissner, but the charges were not revealed on Tuesday.
The U.S. Justice Department announced criminal charges against Leissner and Ng, on Nov. 1.
Leissner pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act, and has agreed to forfeit $43.7 million.
Ng, detained in Malaysia, is facing extradition to the United States.
(Reporting by A. Ananthalakshmi; Additional reporting by Rozanna Latiff; Editing by Jennifer Hughes, Robert Birsel)