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21 Dec, 2018 10:56

Malaysia reportedly seeking $7.5 billion from Goldman Sachs over looting of state fund

Malaysia reportedly seeking $7.5 billion from Goldman Sachs over looting of state fund

Malaysia wants $7.5 billion in reparations from Wall Street investment bank Goldman Sachs, which it accuses of covering up the looting of the nation’s state fund, media reported citing the finance minister.

Malaysia filed criminal charges against the US bank and two of its key bankers over the multi-billion dollar scandal on Monday, accusing them of misappropriating money, bribing officials and giving false statements when helping to arrange bond sales for state fund 1MDB. The bank denies the allegations, claiming it fell victim of the previous corrupt Malaysian government.

Goldman Sachs counted on $1.8 billion in potential losses on legal proceedings over the 1MDB scandal, Reuters reported citing Malaysian Finance Minister Lim Guan Eng’s interview with Financial Times.

“Their figure is $1.8 billion. Ours is $7.5 billion,” Lim said.

Malaysia wants Goldman Sachs not only to return the bonds’ total value amounting to $6.5 billion, but an additional $1 billion. The sum is to cover $600 million in fees paid to the bank as well as bond coupons that the minister says were higher than the market rate.

It is not yet known what sum Attorney-General Tommy Thomas will seek as damages in the suit, but it was earlier reported that the fines for the accused bankers may be at least 1 million ringgit ($240,000).

The bank still denies any wrongdoing. “The 1MDB bond offerings were meant to raise money to benefit Malaysia,” it told Reuters. Goldman Sachs reiterated its previous claim that Malaysian officials were to blame for stealing “huge portion of those funds.”

On Thursday, investors reportedly filed a class action lawsuit against Goldman Sachs over its role in the 1MDB scandal, accusing it of deceiving and covering up key information from investors.

The mounting legal problems come as the bank’s shares sank to the lowest point in more than three years amid the row with Malaysia. Its stock is currently trading at around $168, down from a high of more than $270 in March.

The scandal with the Malaysian state fund has been making headlines for years and is being investigated in at least six countries. It involves high-ranking Malaysian officials including former Prime Minister Najib Razak who have been accused of helping to loot billions from the fund.

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