The Malaysian government has filed criminal charges against 17 current and former directors of Goldman Sachs’ subsidiaries in connection with the 1 Malaysia Development Berhad scandal, ramping up its efforts to recover billions of dollars it alleges were misappropriated from the state investment fund. 

Malaysia’s attorney-general Tommy Thomas said in a statement on Friday that the individuals were being charged under the Capital Markets and Services Act, which has provisions that hold senior executives responsible for offences committed by their organisations. 

“They occupied the highest executive positions in those three Goldman Sachs subsidiaries, and exercised or ought to have exercised decision-making authority over the transactions of those bodies corporate,” the statement said of the directors. 

It named the three subsidiaries as Goldman Sachs International, Goldman Sachs (Asia) LLC and Goldman Sachs (Singapore) Pte. Individuals named included Richard Gnodde, chief executive of Goldman Sachs International, and Michael Sherwood, former co-head of Goldman Sachs International.

A Goldman Sachs spokesperson said in response to the announcement: “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.”

Mr Thomas said criminal fines and custodial sentences would be sought against the individuals, “given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds, the lengthy period over which the offences were planned and executed . . . and the relative value of the fees and commissions paid to Goldman Sachs.”

Mr Thomas said the latest move followed from earlier charges filed against the subsidiaries and their “key employees Tim Leissner and Roger Ng, together with Jasmine Loo Ai Swan of 1MDB and Low Taek Jho, for perpetrating a scheme to defraud the government of Malaysia and purchasers of three bonds with a face value of $6.5bn”.

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The move marks an escalation in the Malaysian government’s investigation into 1MDB, from which $4.5bn has allegedly gone missing.

Earlier this year, the Malaysian government stepped up calls for Goldman Sachs to pay $7.5bn in reparations for its role in the multibillion-dollar embezzlement scandal.

Via Financial Times