KUALA LUMPUR, Malaysia—Malaysia filed criminal charges against 17 current and former
Goldman Sachs Group
executives over their handling of the sprawling financial scandal at state investment fund 1Malaysia Development Bhd.
Malaysia is ramping up pressure on Goldman as the bank negotiates what is likely to be a multibillion-dollar settlement with the U.S. Department of Justice for its role in the fund, known as 1MDB.
Among the current and former Goldman employees charged Friday are two members of Goldman’s top executive committee: Richard Gnodde, who runs the bank’s international operations, and Robin Vince, its chief risk officer. Others include Michael Sherwood, who was overseeing Goldman’s trading operation at the time of the scandal but is no longer with the bank, and Michael Evans, a senior executive at the time of the 1MDB dealings who is now president of Chinese e-commerce company
Alibaba Group Holding
Goldman raised $6.5 billion for 1MDB through three bond sales in 2012 and 2013. U.S. authorities allege that more than $4.5 billion went to fraudulent shell companies controlled by corrupt officials in Malaysia and Abu Dhabi.
Malaysian officials said last year the country would seek a fine well above the $2.7 billion allegedly stolen from the fund. Two former Goldman bankers, Tim Leissner and Roger Ng, and Jho Low, a Malaysian financier, are under indictment in the U.S., accused of conspiring to loot the fund.
The charges on Friday came under a Malaysian law that holds senior executives responsible for any offense that may have been committed on their watch, Malaysia’s attorney general, Tommy Thomas, said. Malaysia has also leveled allegations against three Goldman subsidiaries operating in the region.
“We believe the charges announced today, along with those against three Goldman Sachs entities announced in December last year, are misdirected and will be vigorously defended,” a spokesman for the bank said Friday.
An Alibaba spokesman didn’t immediately reply for a request for comment from Mr. Evans. Mr. Sherwood couldn’t immediately be reached.
Some of those charged, including Mr. Evans, were involved in negotiations with 1MDB. In January 2013, Mr. Evans and other Goldman bankers met with Najib Razak, then Malaysia’s prime minister, at the World Economic Forum in Davos, Switzerland, to discuss the third and largest bond deal for 1MDB.
That bond sale, along with the two preceding ones, were vetted by five internal committees at Goldman, including a business-standards panel formed in response to accusations the firm had misled clients during the financial crisis. That committee’s co-chairman was Mr. Evans, who had run the firm’s Asia business before returning to Goldman’s New York headquarters.
Goldman earlier this year withheld bonuses owed to Messrs. Evans and Sherwood pending the outcome of the 1MDB matter, The Wall Street Journal reported.
Others charged Friday were junior employees at the time of the bond deals. Several no longer work at Goldman. Other employees who the Journal has reported were more closely involved in the 1MDB dealings were not charged.
The criminal charges against the current and former Goldman executives could make them wary of traveling internationally. Malaysia hasn’t taken steps to have them arrested and extradited, which would be an escalation of the case. Malaysia could eventually try them in absentia, a government official said.
The 1MDB scandal has sparked multinational investigations from Switzerland to the U.S., with billions of dollars allegedly siphoned from the fund, which was created by Mr. Najib to boost the Southeast Asian nation’s economy. He has denied wrongdoing.
Public anger over the 1MDB scandal led to Mr. Najib’s election defeat in 2018, and his associates face charges in Malaysia ranging from money-laundering to abuse of power. Mr. Najib himself faces 42 1MDB-related criminal charges and the first of a series of trials at the Kuala Lumpur High Court.
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