Goldman Sachs sued over 1MDB by Abu Dhabi’s IPIC

Goldman Sachs is being sued by IPIC.
Richard Drew/AP

• Abu Dhabi’s IPIC filed a lawsuit against Goldman Sachs
  on Wednesday to recover losses from 1MDB scandal.
• The US investment Bank is being scrutinized for its
  role in the scandal, which saw $4.5 billion
  misappropriated.
• Goldman said it expects to “contest the claim
  vigorously.”
• Morgan Stanley downgraded the rival lender as
  accusations against the bank furthered. 

US investment banking giant Goldman Sachs is facing the music
over the One Malaysia Development Berhad (1MDB) fund scandal.

Abu Dhabi’s International Petroleum Investment Company (IPIC)
filed a lawsuit in New York on Wednesday against Goldman Sachs
and others, according to The Wall Street
Journal.

The civil action by IPIC, a former partner of 1MDB, claims that
Goldman and others “played a central role in a long-running
effort to corrupt former executives of IPIC and its subsidiary
Aabar Investments, and mislead IPIC and Aabar.”

IPIC added that it believed the scandal was “a massive,
international conspiracy to embezzle billions of dollars.”

Goldman Sachs did not immediately respond to Business Insider’s
requests for comment. It told the Journal: “We are in the process
of assessing the details of allegations and fully expect to
contest the claim vigorously.”

Goldman’s stock is down 24.4% for the year to date and was
recently downgraded by rival lender Morgan Stanley on the back of
uncertainty around the investigation.

1MDB was set up by former Malaysian Prime Minister Najib Razak in
2009 and has been major financial scandal since 2015. An
estimated $4.5 billion was misappropriated from 1MDB by
high-level officials and their associates between 2009
and 2014, the US Justice Department has alleged. Najib has
consistently denied wrongdoing.

In 2015, billions of dollars of loans issued by 1MDB, arranged by
Goldman Sachs, were guaranteed by IPIC. IPIC claimed the fund
defaulted on $1.1 billion in repayments in
2016 and Malaysia’s then-government agreed to pay the UAE
investment fund, a settlement which has since been challenged by
the country’s new government. 

Timothy Leissner, a former partner for Goldman Sachs in Asia who
was named in the IPIC lawsuit, has pleaded guilty to conspiracy
to launder money and conspiracy to violate the Foreign Corrupt
Practices Act, and agreed to forfeit
$43.7 million. Fellow Goldman Sachs banker Roger Ng, who was
previously arrested in Malaysia at the request of US authorities,
is also named in the legal action.

Goldman has been under scrutiny for its role in helping 1MDB
raise funds through $6.5 billion in bond offerings in 2012 and
2013, from which it earned around $600 million
in fees — a higher amount than usual, according to critics.

The 1MDB investigations in the US and Malaysia have gathered pace
since Najib unexpectedly lost a general election in May to
Mahathir Mohamad, who returned to power 15 years after he retired
as prime minister.

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