Goldman Sachs 'cheated' Malaysia over 1MDB: PM Mahathir

Blanche Robertson
November 14, 2018

Goldman's shares are down 20 percent this year and investors may have to wait for more clarity on just how painful the consequences will be.

The bank - which hasn't been charged with wrongdoing - has said the investigation could lead to significant fines.

"Obviously we have been cheated", Mahathir said in an interview with CNBC, in response to a question about the restitution Malaysia might seek from the USA bank.

Mahathir said that it could take time, but USA officials have promised to give back any money they recover.

Earlier this month, U.S. prosecutors filed criminals charges on two former Goldman bankers, including Tim Leissnerm who pleaded guilty to violating the Foreign Corrupt Practices Act by conspiring to launder money.

"There is evidence that Goldman Sachs has done things which are wrong", said the 93-year-old, who is in his second stint as premier after coming out of retirement to take on Najib, his former protege.

A Goldman Sachs spokesman in Hong Kong declined to comment on the allegation, Reuters reported.

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Mahathir said he didn't know how much restitution Malaysia might seek from the US bank, adding that the firm's compliance function "doesn't 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.

A DOJ spokeswoman said the USA would continue to pursue justice over the 1MDB investigations and would recover assets to be used to "benefit the people" who were affected by corruption and abuse of power. Whenever possible, recovered assets would be used to "benefit the people" harmed by corruption and abuse of office, she added.

Finance Minister Lim told reporters the country would seek consequential losses as well as the return of fees.

"The Malaysian government will want to reclaim all the fees paid, as well as all the losses including the interest rate differential", Lim told reporters.

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. The potential financial impact and reputational damage are "nearly impossible to quantify at this point in time", while the $600 million in fees the bank earned from work completed for 1MDB "is certainly at risk".

Leissner pleaded guilty and has agreed to pay $43.7 million in restitution of ill-gotten gains. Najib has since been charged with corruption as part of Malaysia's investigation into 1MDB. Low, allegedly a central figure in looting 1MDB, remains at large.

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