Goldman Sachs pleads not guilty to misleading investors in 1MDB scandal
Three units of Goldman Sachs, including one based in London, pleaded not guilty in a Malaysian court today to charges of misleading investors in connection with $6.5bn (£5bn) in bond sales that the bank helped state fund 1Malaysia Development Berhad (1MDB) raise.
The US Department of Justice estimates $4.5bn was misappropriated from 1MDB between 2009 and 2014, including some of the funds that Goldman helped raise.
Malaysian prosecutors filed charges against the units, based in London, Singapore and Hong Kong, for misleading investors by making untrue statements and omitting key facts in relation to the bond issues.
A Goldman Sachs representative pleaded not guilty after the charges were read out at the Kuala Lumpur High Court today, Malaysian news agency Bernama reported.
The court set the trial for November, with hearings scheduled until April 2021.
Goldman Sachs has denied wrongdoing, saying that members of the former Malaysian government and 1MDB lied to it about how the money from the bond sales would be used.
Malaysia has said it is seeking up to $7.5bn in compensation from Goldman over its work with 1MDB, which was launched in 2009 by then prime minister Najib Razak.
Najib lost an election in May 2018 and is now facing criminal charges related to losses at 1MDB and other state entities. He has pleaded not guilty.
Goldman is also being investigated in the US in connection with the scandal.
Earlier this month the US Federal Reserve permanently banned Goldman partner Andrea Vella from the banking industry for his “role in Goldman’s financing of a defrauded Malaysian sovereign wealth fund”.
Two former Goldman employees, Tim Leissner and Roger Ng, have been criminally charged by the Department of Justice for participating in a scheme to divert proceeds of the bond offerings from 1MDB for their personal benefit.
Vella was formerly Goldman Sachs’ co-head of investment banking for Asia Pacific, and was put on leave after an indictment against Leissner identified Vella as a co-conspirator in November 2018.
Leissner pleaded guilty to the Department of Justice indictment.