KUALA LUMPUR, Dec 17 — Malaysia today filed criminal charges under local securities laws against Goldman Sachs subsidiaries over three bonds worth US$6.5 billion (RM27.2 billion) that the US investment bank had handled for 1Malaysia Development Berhad (1MDB).

Attorney General (AG) Tommy Thomas also announced today that charges were filed against former Goldman Sachs bankers Tim Leissner and Roger Ng Chong Hwa, as well as fugitive businessman Jho Low and former 1MDB general counsel Jasmine Loo Ai Swan.

"The charges arise from the commission and abetment of false or misleading statements by all the accused in order to dishonestly misappropriate US$2.7 billion from the proceeds of three bonds issued by subsidiaries of 1MDB, which were arranged and underwritten by Goldman Sachs," Thomas said in a statement.

The three bonds were US$1.75 billion bonds issued by 1MDB Energy Limited on May 18, 2012, US$1.75 billion bonds issued by 1MDB Energy (Langat) Limited on October 17, 2012, and US$3 billion bonds issued by 1MDB Global Investments Limited on March 16, 2013.

The Malaysian government accused Leissner, who has pleaded guilty to US charges of conspiring to steal 1MDB funds, and Ng of conspiring with Low and Loo and others to bribe Malaysian public officials in order to secure Goldman Sachs’ participation in these bond issuances.

The AG noted that Goldman Sachs’ fees of US$600 million for undertaking the 1MDB bonds exceeded market rates and industry norms, pointing out that these employees and directors of the American investment banking giant had received large bonuses.

"The Offering Circulars and Private Placement Memorandum for the Bonds filed with the Labuan Financial Services Authority, the financial regulator of Labuan, Malaysia’s off-shore banking jurisdiction (which are the subject matter of the charges), contained statements which were false, misleading or from which there were material omissions by representing to investors that the proceeds of the bond issuances would be used for legitimate purposes, when in fact the proceeds were corruptly and fraudulently misappropriated,” said Thomas.

He alleged that the scheme to defraud the Malaysian government and purchasers of the bonds violated Section 179 of the Capital Markets and Services Act 2007.

"Malaysia considers the allegations in the charges against all the accused to be grave violations of our securities laws, and to reflect their severity, prosecutors will seek criminal fines against the accused well in excess of the US$2.7 billion misappropriated from the bonds proceeds and US$600 million in fees received by Goldman Sachs, and custodial sentences against each of the individual accused: the maximum term of imprisonment being 10 years.”

Bukit Aman said last month that former Goldman Sachs banker Ng would be extradited to the US before the end of December to face charges of conspiracy to launder money embezzled from 1MDB and of paying bribes to Malaysian and Abu Dhabi officials.

The Edge reported that the primary target of the Malaysian government’s criminal charges against Goldman Sachs was Goldman Sachs International (UK) that had arranged the sale of the three bonds.

Goldman Sachs (Singapore) Pte and Goldman Sachs (Asia) LLC were reportedly charged with abetting Goldman Sachs International in omitting material information and publishing untrue statements in the offering circulars for the bonds.

Malaysia has reportedly accused Goldman Sachs International, as the arranger of the bonds, of omitting to state that Low was the operator and key intermediary for 1MDB, among others.