Goldman Sachs bankers \'cheated\' Malaysia over 1MDB - PM Mahathir

Goldman Sachs bankers 'cheated' Malaysia over 1MDB - PM Mahathir

Reuters  |  KUALA LUMPUR 

(Reuters) - Bankers at Group Inc "cheated" in dealings with state fund 1MDB, said, amid growing calls in the country for more aggressive steps to recoup fees earned by the

The has said about $4.5 billion was misappropriated from 1MDB, including some money that helped raise, by high-level officials of the fund and their associates from 2009 through 2014.

U.S. prosecutors filed criminal charges against two former bankers earlier this month. One of them, Tim Leissner, pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act.

"There is evidence that Goldman Sachs has done things that are wrong," Mahathir said in an interview with U.S. channel CNBC aired on Tuesday.

"Obviously we have been cheated through the compliance by Goldman Sachs people," he said, without specifying details.

The bank's compliance controls "don't work very well", he added.

A Goldman Sachs in Hong Kong declined to comment on the interview.

Goldman Sachs' share price fell to its lowest in nearly two years on Monday after Malaysia's said his country would seek a "full refund" of the fees the earned from 1MDB deals. Goldman denied any wrongdoing.

Anwar Ibrahim, appointed successor to 93-year-old Mahathir, told parliament on Tuesday that the country needs to take "more aggressive measures" to reclaim the fees and losses "due to the effects on Malaysia's image".

The U.S. bank earned about $600 million in fees for its work with 1MDB, which included three bond offerings in 2012 and 2013 that raised $6.5 billion.

Speaking to reporters on Tuesday, Lim repeated his stance that wants to reclaim fees paid to Goldman Sachs, and added that the country will also seek consequential losses.

"The will want to reclaim all the fees paid, as well as all the losses including the interest rate differential," Lim told reporters. He said the rate paid was about 100 basis points higher than the market rate.

Critics have said the fees earned by Goldman Sachs was far in excess of the normal 1-2 percent fees a bank could expect for helping sell bonds.

Goldman has said the outsized fees related to additional risks: it bought the unrated bonds while it sought investors and, in the case of the 2013 bond deal which raised $2.7 billion, 1MDB wanted the funds quickly for planned investment.

Lim did not say how Malaysia would seek to recoup any money beyond that he will leave the matter to Malaysia's

Citing sources, reported in June that Malaysia was considering asking the to get Goldman Sachs to return the fees it had earned from the 1MDB deals.

Malaysia's government, elected to power only in May, is scrambling to bring back funds that were allegedly siphoned off from 1MDB - a fund founded by former

The 1MDB scandal was a major reason for Najib's shock election loss. Najib has since been charged with corruption as part of Malaysia's investigation into 1MDB. He has pleaded not guilty and denied any wrongdoing.

Malaysian Low Taek Jho, described by U.S. and Malaysian authorities as central to the 1MDB scandal, was charged by U.S. prosecutors this month. He remains at large.

(Reporting by A. Ananthalakshmi and Joseph Sipalan; Editing by and Christopher Cushing)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, November 13 2018. 12:45 IST