Malaysia filed criminal charges against 17 current and former Goldman Sachs executives on Friday, including an ex-vice chairman who is now president of Chinese e-commerce giant Alibaba, as part of a multibillion-dollar corruption probe at state fund 1MDB, authorities said.
Goldman Sachs served as underwriter of three bond sales that raised $6.5 billion for 1Malaysia Development Berhad (1MDB), according to court documents filed by the U.S. Department of Justice.
The DOJ earlier alleged that more than $2.7 billion of the proceeds was fraudulently siphoned off by high-level officials of the sovereign wealth fund and their associates from 2009 until 2014.
“Criminal charges were filed today,” Malaysian Attorney General Tommy Thomas said in a statement, explaining that because of the severity of the scheme to defraud, “custodial sentences and criminal fines will be sought against the accused.”
Among the individuals charged was Richard Gnodde, CEO of Goldman Sachs International, and John Michael Evans, who was the bank’s vice chairman until his retirement in 2013. Two years later, Evans became president of the Alibaba Group, Beijing’s internet titan, leading the company’s global expansion beyond China.
Gnodde and Evans had directed Goldman Sachs subsidiaries in Malaysia.
All 17 individuals were charged under a law that holds senior executives responsible for any offenses that may have been committed during their tenure, Thomas said. The charges were filed in absentia.
If convicted, those charged could face prison sentences of up to 10 years and fines of at least 1 million ringgit (U.S. $239,000).
Thomas said the fresh charges were related to similar ones filed in December 2018 against three Goldman Sachs subsidiaries and their key employees Tim Leissner and Roger Ng, who were charged together with 1MDB official Jasmine Loo Ai Swan, who is at large, and fugitive businessman Low Taek Jho (better known as Jho Low).
The U.S.-based Goldman Sachs earned about $600 million (2.5 billion ringgit) in fees paid for by 1MDB from the bond sales, according to court documents. The investment bank previously denied allegations of wrongdoing.
“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 Goldman told BBC News on Friday.
In May, Malaysia extradited Ng to the United States for 10 months face criminal charges linked to 1MDB, which was founded in 2009 by former Prime Minister Najib Razak ostensibly to spur economic development in the country.
Najib himself faces dozens of criminal charges, with Malaysian prosecutors accusing him of pocketing $681 million (2.85 billion ringgit) from the sovereign wealth fund. He has pleaded not guilty.
Ng, a Malaysian, had been detained in Kuala Lumpur since Nov. 1, 2018, after DOJ announced the charges against him. He was accused of laundering up to $4.5 billion (18.8 billion ringgit) of funds diverted from 1MDB. The money was allegedly pumped into luxury New York properties and used to acquire other ostentatious items including a luxury yacht, expensive artwork and a jet, DOJ officials said.
Ng was charged in the United States for his role in the alleged conspiracy to launder 1MDB funds. He also faces charges of violating America’s Foreign Corrupt Practices Act.
Jho Low, whose whereabouts remain unknown, and Leissner were previously charged in the United States. Leissner pleaded guilty to violating anti-bribery laws and conspiring to launder money.
Thomas said Leissner, a former partner of Goldman Sachs in Asia, agreed to forfeit U.S. $43.7 million (182.9 million ringgit).
Commenting on the fresh charges, Malaysian lawyer Syahredzan Johan said Kuala Lumpur had the option to go to Interpol to seek assistance in capturing the 17 individuals who were charged on Friday.
That, however, would require cooperation of the countries where the individuals are residing, Syahredzan said
“It should not be a problem since there are mechanisms to facilitate that, but of course, we need to know where they are, to begin with,” he said, “and that is usually the difficult part.”