Malaysia is scrambling to bring home billions of dollars allegedly siphoned off from 1MDB, a state fund founded by ex-premier Najib Razak, who lost a general election last month.
His successor, Prime Minister Mahathir Mohamad, said Malaysia is also seeking to arrest financier Low Taek Jho, a central figure in the scandal who advised on investments and negotiated deals for 1MDB.
Malaysian authorities want to ask the DoJ, which is pursuing a corruption and money laundering probe at 1MDB, to get Goldman to disgorge profits it made from the sale of the bonds, after which Malaysia would claim the money, the two sources familiar with the matter said.
No formal request has been made to the DoJ on the Goldman fees, but top officials are actively discussing the plan within the government, they said.
“There have been no official requests yet, but this is being discussed,” said a Malaysian government source.
A financial industry source in Malaysia, who is aware of the discussions, said back channel talks between the government and the DoJ were under way.
How Kuala Lumpur would go about claiming the funds, and the legal hurdles in the process were not immediately made clear by the sources.
A spokeswoman for Finance Minister Lim Guan Eng said the minister had no comment on the matter.
The DOJ and a spokesman for Goldman Sachs declined to comment.
The U.S. Embassy in Kuala Lumpur directed Reuters to the DoJ for comment.
Goldman raised nearly $6.5 billion in three bond sales between 2012 and 2013 for 1MDB.
More than $2.5 billion raised from these bonds was misappropriated by high-level 1MDB officials, their relatives and associates, according to DoJ civil lawsuits filed in a U.S. court in 2016.
The U.S. bank earned almost $600 million for the three deals – an amount critics say is far in excess of the normal 1-2 percent fees a bank could expect for helping sell bonds.
A special task force set up after the election to look into 1MDB met officials from the DoJ and the U.S. FBI to discuss the probe in late May, including the process of returning the funds to Malaysia, the government has said.
Mahathir told reporters the government was trying to arrest Low, popularly known as Jho Low, but he was not in the country. “We don’t have extradition rights in the country where he is staying,” he said. He did not say which country Low was in.
Low was regarded as close to Najib and his family.
The Malaysian Anti-Corruption Commission (MACC) had issued an arrest warrant for Low, as well as for Nik Faisal Ariff Kamil, a director of former 1MDB unit SRC International, a source familiar with the matter had earlier told Reuters.
It was also preparing an arrest warrant for Roger Ng, a former Goldman banker, the source said.
Singapore authorities said on Friday they had issued arrest warrants in 2016 for Low and his associate, Tan Kim Loong, and requested an Interpol notice. It was the first time Singapore has acknowledged it was seeking Low’s arrest.
Low and 1MDB have denied any wrongdoing. Tan Kim Loong could not be reached for comment.
Low advised on investments and negotiated deals for 1MDB, though he never held any official role in the fund.
1MDB is the subject of money-laundering probes in at least six countries, including the United States, Switzerland and Singapore.
Najib has denied any wrongdoing, but has been questioned by government investigators after the election. He and his wife have been barred from leaving the country.
Goldman has always maintained that it did nothing wrong and that it had no visibility into whether some of the funds raised may have been subsequently diverted to other purposes.
In civil lawsuits filed by the DOJ to seize assets bought with misappropriated 1MDB money, U.S. authorities say investors were not properly informed about the use and nature of the bonds that Goldman helped sell for 1MDB.
The Wall Street bank however was not accused of any wrongdoing in the lawsuits.
Goldman has come under scrutiny for its involvement in the 1MDB affair, with U.S. and Singapore authorities looking into its role in helping raise funds for 1MDB through the bonds.
Goldman’s former Southeast Asia chairman, Tim Leissner, was issued a 10-year prohibition order by Singapore last year and was also barred from the U.S Securities industry.
Leissner was responsible for managing Goldman’s relationship with 1MDB and had helped arrange the sale of U.S. dollar bonds for 1MDB, sources have said.
Leissner, who took over the role in mid-2014, resigned in 2016 after he had allegedly violated the firm’s internal rules, a source has told Reuters. – Reuters