Goldman 'cheated' Malaysia over 1MDB

KUALA LUMPUR/SINGAPORE - Malaysian Prime Minister Mahathir Mohamad said bankers at Goldman Sachs Group Inc "cheated" the country in dealings with state fund 1MDB and that US authorities have promised to help return the fees the Wall Street bank earned from the fund.

The US investment bank has been under scrutiny for its role in helping raise funds through bond offerings for 1Malaysia Development Berhad (1MDB), which is the subject of corruption and money-laundering investigations in at least six countries.

Goldman's stock fell to a near two-year low on Monday after Malaysian Finance Minister Lim Guan Eng said his country would seek a "full refund" of the around $600 million in fees the bank earned from raising $6.5 billion for the fund. The stock eased 0.5 percent on Tuesday.

A Goldman Sachs spokesman on Monday said in an email to Reuters that the bank denied any wrongdoing.

The US Department of Justice (or DOJ) has said about $4.5 billion was misappropriated from 1MDB, including some money that Goldman Sachs helped raise, by high-level officials of the fund and their associates from 2009 through 2014.

US prosecutors filed criminal charges against two former Goldman Sachs bankers earlier this month. One of them, Tim Leissner, pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act.

"There is evidence that Goldman Sachs has done things that are wrong," Mahathir said in an interview with US news channel CNBC aired on Tuesday.

Asked about Goldman's compliance controls - which are supposed to monitor and prevent risky behavior at the bank - Mahathir responded: "It does not work very well."

In later comments in Singapore, where he is due to attend a regional summit, Mahathir suggested Malaysia could take action against Goldman if it was found to have broken the law.

"If the law says that somebody has committed a crime, then he should be accordingly punished through the process of law," he said. "It doesn't matter who - it may be Goldman Sachs, it may be whoever."

Goldman Sachs did not immediately respond to requests for comment.

A DOJ spokeswoman said the United States continued to pursue justice with respect to its 1MDB investigations. Whenever possible, recovered assets would be used to "benefit the people" harmed by corruption and abuse of office, she added.

Anwar Ibrahim, appointed successor to 93-year-old Mahathir, told parliament on Tuesday that Malaysia needed to take "more aggressive measures" to reclaim the fees and losses due to the harm the scandal had done to the country's image.

Critics have said the fees earned by Goldman Sachs were far in excess of the normal 1-2 percent a bank could expect for helping sell bonds.

Reuters - Afp