Tuesday, October 20, 2020

Malaysia drops criminal charges against Goldman Sachs after 1MDB settlement

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Malaysia has dropped criminal charges against units of Goldman Sachs Group Inc. over the bank’s role in the alleged theft of billions of dollars from a government investment fund, a key step under the terms of a recent $3.9 billion settlement.

Goldman was the main banker for 1Malaysia Development Bhd., or 1MDB, which Malaysia created in 2009 to help spur economic growth. The bank raised billions of dollars for the Malaysian fund, much of which was allegedly stolen by people who worked for the fund, government officials and two senior Goldman bankers.

In July, Goldman agreed to pay Malaysia $2.5 billion and guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund as part of efforts by the Wall Street bank to move on from one of the worst scandals in its history. Malaysia agreed to drop criminal proceedings against the bank related to the fund.

A Malaysian court Friday discharged and acquitted three subsidiaries of the bank over their alleged involvement in the scandal.

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Goldman raised $6.5 billion for 1MDB through three bond sales in 2012 and 2013, much of which U.S. authorities say was stolen by a Malaysian government adviser, Jho Low. U.S. prosecutors say the bank ignored warning signs about Mr. Low and the fund in pursuit of fees that eventually reached about $600 million.

Goldman has said it was misled by two bankers who worked on the deals, Southeast Asia chairman Timothy Leissner and managing director Roger Ng. Mr. Leissner has pleaded guilty in the U.S. to charges of conspiracy to launder money and violate antibribery laws. Mr. Ng has been indicted on bribery and money-laundering charges. He has pleaded not guilty.

The July settlement and Friday’s court decision don’t cover proceedings against Messrs. Leissner and Ng.

Goldman is still in discussions with the U.S. Department of Justice for a settlement. Late last year, the bank was close to a deal to pay a fine of about $2 billion and was negotiating whether to plead guilty to violating antibribery laws, The Wall Street Journal has reported.

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The scandal led to the downfall of former Malaysian Prime Minister Najib Razak, who is on trial for money laundering and abuse-of-power charges relating to 1MDB. Mr. Najib, who denies wrongdoing, was in July found guilty in the first of a string of cases and sentenced to 12 years imprisonment and fined nearly $50 million. He is appealing the ruling in Malaysia’s Court of Appeal.

Original article on WSJ.com

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