Monday, October 26, 2020

Goldman Sachs shareholders demand investigation into 1MDB money laundering scandal

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Goldman Sachs shareholders have written to the bank’s board to demand investigation and potential legal action in relation to the money-laundering scandal surrounding Malaysian sovereign wealth fund, 1MDB.

The 27-page letter was delivered to the board of directors by investor law firm Grant & Eisenhofer on behalf of a pair of pension funds managed for Goldman investors Cleveland Bakers & Teamsters.

The letter concerns Goldman Sachs‘ involvement in the global bribery and money laundering scandal surrounding the Malaysian sovereign wealth fund, 1 Malaysia Development Berhad (1MDB), the law firm said.

Based on public and confidential records obtained by the stockholders, the letter details how Goldman bankers conspired with Malaysian financier Low Jho and former Malaysian prime minister Najib Razak to help them divert proceeds from a trio of 1MDB bond transaction to their personal accounts, as well as their families and political patrons.

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A total of $4.5bn was stolen, with Goldman pocketing $580m for its involvement in the deal.

Back in February, Goldman Sachs said it would potentially cut the bonuses of top executives in response to the fallout from the scandal as an acknowledgement to shareholders and the general public of wrongdoing.

However, shareholders have since called for further action to be instigated by the board.

The letter demands the board investigates individuals and entities responsible for the bank’s involvement in the scandal, else further legal action will be taken.

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Stockholders are calling for Goldman’s board to “pursue all remedies” against those involved – both current and former officers and directors.

They claim that blind faith and negligence has “permitted Goldman to facilitate disastrous bond deals that proved ruinous for Malaysia’s sovereign wealth fund while enriching Low, Najib and their friends and political supporters.”

According to the letter, Goldman now expects to expend $1.9bn more on legal matters than it had initially reserved, while also suffering crippling reputational damage in relation to the scandal.

Beyond repercussions against the bank as a whole, the letter further calls for lawsuits against the appropriate individuals “for breaches of fiduciary duties of loyalty and care; aiding and abetting those breaches, unjust enrichment; RICO claims; and other violations of the law”.

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