Prime Minister Mahathir Mohamad said the bankers at Goldman Sachs "cheated" Malaysia during dealings with the state fund 1MDB on Tuesday, according to CNBC.
Mahathir has called for taking more aggressive steps to help recoup fees earned by the bank which has already been under scrutiny for its role in helping raise funds through bond offerings for 1MDB.
The massive 1Malaysia Development Bhd has already become the subject of investigations in six countries looking into money-laundering and corruption allegations.
The United States Department of Justice said nearly $4.5 billion was misappropriated from the fund, including some of the money Goldman Sachs helped raise, from 2009 through 2014.
Earlier this month, federal prosecutors filed criminal charges against two former Goldman Sachs bankers, including Tim Leissner who pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act.
"There is evidence that Goldman Sachs has done things that are wrong," Mahathir said. "Obviously we have been cheated through the compliance by Goldman Sachs people."
Even though he did not offer any specific details, he said the compliance controls at Goldman Sachs "don't work very well."
A Goldman Sachs spokesman in Hong Kong declined to comment on the interview.
But Goldman Sachs' shares fell to its lowest point in nearly two years after Malaysia' s Minister of Finance Lim Guan Eng said he would be seeking a "full refund" of the fees from the bank.
Lim repeated that stance again on Tuesday while adding his country would also seek consequential losses.
"The Malaysian government will want to reclaim all the fees paid, as well as all the losses including the interest rate differential," Lim said, noting the rate Malaysia paid was nearly 100 basis points higher than the market rate.
Goldman has denied any wrongdoing.
Anwar Ibrahim, who was appointed the successor to 93-year-old Mahathir, told Malaysia's parliament the country needed to take "more aggressive measures" to take back the fees "due to the effects on Malaysia's image."
Reports indicated Goldman Sachs earned nearly $600 million in fees for its work on the fund, including three bond offerings in 2012 and 2013 that raised $6.5 billion.
Critics argued the fees were excessive and nearly 1 to 2 percent more than fees a bank could normally expect for helping sell bonds.
The bank has claimed the fees were related to additional risks since it purchased the unrated bonds when it sought investors since 1MDB wanted the funds quickly for planned investment in 2013.
Lim said he would leave it to Malaysia's attorney general to determine how to recoup the funds.
But Reuters previously reported the country was considering working with the US DOJ to get Goldman Sachs to return the fees to Malaysia.
The Malaysian government has been focusing their first year in office to bring back the funds that were stolen from the 1MDB fund which was founded by former premier Najib Razak, who has been charged with corruption in Malaysia over the mismanaged fund.
He has pleaded not guilty and denied any wrongdoing but police seized a number of luxury goods and large bags of cash from his private residence when they searched the locations earlier this year.
-WN.com, Maureen Foody
Photo:
AP / Joshua Paul, File
