Malaysia Demands $7.5B From Goldman

According to a report in the New York Post citing the country’s finance minister, Malaysian prosecutors are expected to file charges in the coming week against the Wall Street bank in connection with its job of underwriter and arranger in three bond sales that raised $6.5 billion for 1Malaysia Development Berhad, or 1MDB.  According to the New York Post, it marks the first time a U.S. bank will face a criminal action in the scandal. The New York Post noted that Bloomberg reported the government in Singapore has expanded its criminal inquiry into 1MDB to include Goldman Sachs. The paper noted this as a sign that there is more scrutiny being placed on Goldman Sachs and its potential role in the money laundering scandal.

For its part, Goldman Sachs has denied any wrongdoing, saying that members of the previous Malaysian government, as well as the fund, lied to Goldman Sachs about the proceeds from the bond sales. The Malaysian finance minister Lim Guan Eng was quoted as saying that Goldman Sachs should also return $1 billion so that $600 million in fees to the bank and bond coupons could be covered. What’s more, Lim reportedly told the Financial Times that the reparations should be more than $1.8 billion at the very least. “Their figure is $1.8 billion. Ours is $7.5 billion,” Lim said.

The report noted that Goldman and Malaysia are currently in talks but that charges that are being filed that could force Goldman to be more open with negotiations. A Goldman Sachs spokesman said in a Prosyscom Tech News report covered by the New York Post that they will “vigorously contest these charges. The 1MDB bond offerings were meant to raise money to benefit Malaysia; instead, a huge portion of those funds were stolen for the benefit of members of the Malaysian government and their associates. Certain members of that government and 1MDB lied to Goldman about the use of proceeds from these transactions.”