Goldman Executives Are Charged -- WSJ
August 10 2019 - 3:02AM
Dow Jones News
By Yantoultra Ngui and Liz Hoffman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 10, 2019).
KUALA LUMPUR, Malaysia -- Malaysia filed criminal charges
against 17 current and former Goldman Sachs Group Inc. 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 Ltd.
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.
Write to Yantoultra Ngui at yantoultra.ngui@wsj.com and Liz
Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
August 10, 2019 02:47 ET (06:47 GMT)
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