Investment bank’s most senior bosses in London among top bankers facing criminal charges

The most senior Goldman Sachs banker in London is among 17 former and current bosses at the investment bank facing criminal charges in Malaysia in connection with the multibillion-dollar 1MDB scandal.

Richard Gnodde, the chief executive of Goldman Sachs’ international operations, has been charged by Malaysian authorities for heading up one of the bank’s major subsidiaries between 2012 and 2013. During that period, Goldman helped raise $6.5bn (£5.4bn) for the Malaysian sovereign wealth fund 1MDB, $4.5bn of which was allegedly looted by fund officials and the former Malaysian prime minister Najib Razak.

Criminal charges have also been filed against Gnodde’s former co-CEO Michael Sherwood, as well as three former board members of the London-headquartered subsidiary: Brian Griffiths, Robin Vince and Claes Dahlback. Twelve current and former bosses of Goldman’s Hong Kong and Singapore offices were also charged.

The charges, which carry a maximum 10-year prison sentence, were brought under Malaysia’s Capital Markets and Services Act, which holds senior executives responsible for offences that may have been committed during their time in office.

“They occupied the highest executive positions in those three Goldman Sachs subsidiaries, and exercised or ought to have exercised decision-making authority over the transactions of those bodies corporate,” documents filed by the Malaysian attorney general’s office said.

“Custodial sentences and criminal fines will be sought against the accused … given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds,” the filings added.

Prosecutors allege the fraud involved 1MDB officials and Najib using misappropriated funds to buy luxury real estate in major cities including New York, pricey artworks, and to fund the production of Hollywood films including The Wolf of Wall Street.

Najib, ousted in an election last year, is facing dozens of criminal charges related to 1MDB. He has pleaded not guilty and denied any wrongdoing.

In January, the Goldman Sachs chief executive, David Solomon, apologised to the people of Malaysia over the role of former employee Tim Leissner in the 1MDB scandal and the effect the fraud had on the country. Leissner, a former partner of Goldman Sachs in Asia, pleaded guilty in the US last August to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act and agreed to forfeit $43.7m.

But Goldman Sachs itself has consistently denied any wrongdoing and says certain members of the former Malaysian government and the 1MDB fund lied to Goldman Sachs and lawyers about how the proceeds would be used. It pledged to challenge the fresh charges.

Goldman Sachs said: “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.”

Last year, Malaysia filed criminal charges against Goldman Sachs and two of its former employees – including Leissner – over the scandal. It is seeking up to $7.5bn in reparations from Goldman over its dealings with 1MDB.

Comment: So, thus far, Goldman has ‘forfeited’ $43 million although the true cost could be in the billions??

The US Department of Justice is investigating the bank for its role as underwriter and arranger of the bond offer.

US and Malaysian prosecutors have also charged the Malaysian financier Jho Low, who has been accused of working as an intermediary and masterminding the fraud. Jho insists he has not broken any laws and is not guilty of fraud.