Malaysia drops criminal cases against three Goldman Sachs entities over 1MDB-linked bonds

Deputy public prosecutor Datuk Masri Mohd Daud today informed the High Court that the prosecution wishes to discontinue its case against the three companies. — Picture by Shafwan Zaidon
Deputy public prosecutor Datuk Masri Mohd Daud today informed the High Court that the prosecution wishes to discontinue its case against the three companies. — Picture by Shafwan Zaidon

KUALA LUMPUR, Sept 4 ― Malaysia today dropped all criminal charges against the UK-based Goldman Sachs International and its Asian entities Goldman Sachs (Asia) LLC and Goldman Sachs (Singapore) Pte, owing to “new developments”.

Deputy public prosecutor Datuk Masri Mohd Daud today informed the High Court that the prosecution wishes to discontinue its case against the three companies.

“Yang Arif, there are new developments in this case, where the prosecution does not plan to continue prosecution on all charges on all Goldman Sachs entities. With that we withdraw the charges,” he said, without elaborating on what the new developments are.

Hisyam Teh Poh Teik, who was representing all three Goldman Sachs entities, then requested the High Court issue orders for a “discharge amounting to acquittal in respect of all charges in respect of all the defendants in these cases”.

Masri said the prosecution has no objection to this request as it was discontinuing prosecution against the Goldman Sachs companies.

High Court judge Mohamed Zaini Mazlan then read out his orders to discharge and acquit all three Goldman companies.

Later, Hisyam confirmed to Malay Mail that each company was acquitted of all four charges each against them, which means the three Goldman Sachs companies were collectively discharged and acquitted of a total of 12 charges.

Goldman Sachs International’s four charges were all filed in December 2018 under Section 179(c) of the Capital Markets and Services Act 2007, with the charges related to its alleged omission of and making of untrue statements involving material facts in relation to 1MDB subsidiaries’ issuance of three bonds worth US$6.5 billion.

In the charges, Goldman Sachs International was accused of having left out material facts --- including Low Taek Jho’s role as the operator and key intermediary of 1MDB --- to ensure investors would not be misled during the 2012 sale of a US$1.75 billion bond by 1MDB Energy Limited,  the 2012 sale of a US$1.75 billion bond by 1MDB Energy (Langat) Limited and the 2013 sale of a US$3 billion bond by 1MDB Global Investments Limited.

Goldman Sachs International was also accused in the charges of having made an untrue statement of material fact in the 2013 offering circular for the same US$3 billion bond sold by 1MDB Global Investments Limited.

The bonds were issued to raise funds for the 1MDB subsidiaries to buy independent power plants and for a purported planned investment.

As for the Hong Kong-based Goldman Sachs (Asia) LLC and Singapore-based Goldman Sachs (Singapore) Pte, both companies had each faced four counts each of abetting Goldman Sachs International in the commission of the offences. Their charges were brought under Section 370(c) of the Capital Markets and Services Act 2007.

All 12 charges against the three Goldman Sachs companies are punishable under Section 182 of the same Act, with penalties of a maximum ten-year jail term and a fine of not less than RM1 million.

All three companies had previously pleaded not guilty to the 12 charges and claimed trial.

The prosecution’s dropping today of all 12 charges against the three Goldman Sachs companies comes shortly after the investment bank’s recent striking of a deal with the Malaysian government to drop criminal charges in return for paying money.

On July 24, US investment bank Goldman Sachs and the Malaysian government reportedly confirmed having agreed in principle to a US$3.9 billion (RM16.6 billion) settlement over the 1MDB scandal, with the deal comprising of a US$2.5 billion cash payment that Goldman Sachs has to make and with the bank to also guarantee a return of at least $1.4 billion in seized assets linked to 1MDB bonds.

Former government officials including the previous attorney general, Tan Sri Tommy Thomas, have however pointed out that these assets were those already seized by other governments across the world and included some that have already been returned to Malaysia.

Malaysia’s Finance Ministry had on July 24 said that the US$3.9 billion deal will resolve all outstanding charges and claims against Goldman Sachs over the three 1MDB-linked bonds, with Finance Minister Tengku Datuk Seri Zafrul Aziz saying then: “We are also glad to be able to resolve this outside the court system, which would have cost a lot of time, money and resources. With this settlement, we will have the return of the monies expedited, and not held up by lengthy and costly court battles and legal process.”

On August 18, Goldman Sachs Group Inc had confirmed that it had signed an agreement with Malaysia to finalise the US$3.9 billion deal, with news wire Bloomberg reporting that the company has to pay US$2.5 billion in cash to Malaysia within 10 days.

Local daily The Edge previously reported that Malaysia had on August 27 received payment of US$2.5 billion from Goldman Sachs.

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