x

Abu Dhabi, UAEFriday 16 November 2018

Quick take: Goldman's role in 1MDB scandal explained

How the investment bank found itself in hot water over its alleged dealings with Malaysia's embattled sovereign fund

The US indicted two former Goldman Sachs employees, accusing them of working with a Malaysian financier to move millions of dollars out of 1MBD.. REUTERS
The US indicted two former Goldman Sachs employees, accusing them of working with a Malaysian financier to move millions of dollars out of 1MBD.. REUTERS

Goldman Sachs has come under scrutiny over its role in channelling funds out of Malaysia's sovereign wealth fund, which was headed by the country's former prime minister Najib Razak. We look at what's at stake for the bank.

What is 1MDB?

1Malaysia Development Berhad is Malaysia’s sovereign wealth fund fully owned by the country’s ministry of finance. The strategic investment entity owns a number of interests in the real estate and energy sector. The company was chaired by Najib Razak, the country’s former prime minister, who is now mired in a financial scandal.

What is the controversy over 1MDB?

Mr Razak, who headed 1MDB, was accused of embezzling 2.67 billion Malaysian ringgit, equivalent to $700m to his own personal bank accounts. The controversy led to Mr Razak’s resignation.

How is Goldman Sachs involved?

US investment bank Goldman Sachs made $600m in fees from a $3bn state-guaranteed bond issue, according to court papers.

What penalty has Goldman Sachs incurred?

The US indicted two former Goldman Sachs employees on Thursday, accusing them of working with a Malaysian financier to move millions of dollars out of 1MDB.

What do the indictments say?

The charges brought by the US Justice Department say that around $2.7bn was paid in kickbacks to officials in Malaysia by Goldman Sachs employees. Other estimates suggest the figure was substantially higher.

_______________

Read more:

Lehman's collapse a decade ago might have ushered in a fairer world

Goldman and Morgan Stanley gain from targeting ultra-rich

______________