1MDB probe: Malaysia drops alleged criminal charges against Goldman

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US bank had agreed to pay Malaysia $3.9bn to settle probe into its alleged role in scandal involving state fund 1MDB.

Malaysian prosecutors have withdrawn criminal charges against three Goldman Sachs units accused of misleading investors over $6.5bn in bond sales they helped organise for a state fund, the Bernama state news agency has reported.

Friday’s move comes after the US banking giant agreed to pay $3.9bn to Malaysia to settle a probe into its alleged role in the scandal involving 1Malaysia Development Berhad (1MDB), the fund which counts former Malaysian prime minister Najib Razak as one of its co-founders.

The United States Department of Justice estimates $4.5bn was misappropriated from 1MDB between 2009 and 2014, including some of the funds that Goldman Sachs helped raise.

The units – based in London, Hong Kong and Singapore – had pleaded not guilty in February and the bank has consistently denied wrongdoing.

“Goldman Sachs International Ltd, Goldman Sachs (Asia) LLC and Goldman Sachs (Singapore) are therefore discharged amounting to an acquittal from all four charges made against them,” Bernama quoted High Court judge Mohamed Zaini Mazlan as saying.

The United States Department of Justice estimates $4.5bn was misappropriated from Malaysia’s 1MDB between 2009 and 2014, including some of the funds that Goldman Sachs helped raise in bond sales [File: Olivia Harris/Reuters]

Lawyers for Goldman Sachs and the prosecution could not be immediately reached for comment.

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Suthe part of its deal with Malaysia, Goldman has paid $2.5bn in cash and guaranteed the return of $1.4bn in 1MDB assets seized around the world.

Goldman Sachs had to boost its legal reserves by $2.01bn to account for the Malaysia settlement, shaving its second-quarter net income by 85 percent and wiping out what had been a surprise jump in profit due to trading gains.

Malaysian prosecutors will also cease pursuing the case against Goldman Sachs’s 17 current and former directors, the Bloomberg news agency reported, quoting people familiar with the matter who asked not to be named as the information is private.

The scandal surrounding 1MDB had led to Najib’s removal in 2018 and triggered corruption investigations in at least 10 countries, including Singapore and Switzerland. Najib was found guilty of corruption last month and sentenced to 12 years in prison in the first trial over the scandal to reach a conclusion. Najib has maintained that he is innocent.


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