SINGAPORE (Mar 15): Goldman Sachs Group was called on by Malaysia’s market regulator to defend its role in transactions involving troubled state fund 1MDB at the risk of administrative sanctions.
The Securities Commission sent a show-cause letter to the bank in December, asking Goldman to explain why such action shouldn’t be taken against the bank, the regulator said in a Friday statement. The commission has the power to impose administrative sanctions and undertake civil enforcement proceedings as well as criminal prosecutions, the statement added.
A spokesman for Goldman Sachs declined to comment.
Goldman Sachs is already facing criminal charges in Malaysia, which alleged in December that the New York-based lender misled investors in arranging US$6.5 billion ($8.8 billion) of bond sales for 1MDB. The bank has pledged to vigorously defend against the accusations, saying that former Malaysian officials lied to the bank about how proceeds from the bond sale would be used.
The SC, which has stepped up probes related to 1MDB, will do a thorough assessment of Goldman’s response, and impose administrative sanctions if the bank fails to give a satisfactory explanation, it said. The SC has also lent its investigating officers to help the public prosecutor build its separate case against the bank, it added.
Malaysia’s criminal charges were filed against three of the lender’s units -- Goldman Sachs International (UK), Goldman Sachs (Singapore) and Delaware-based Goldman Sachs (Asia) LLC.
In January, the SC imposed a 2.2 million ringgit ($729,000) fine on Deloitte PLT, a former auditor of 1MDB units, for failing to immediately report irregularities in a sukuk sale that may have had a material effect on 1MDB’s ability to repay creditors. The regulator is also conducting inquiries into a bond issued by Terengganu Investment Authority, an entity predating 1MDB, which investigators suspect may have been a source of US$126 million of illicit funding for fugitive financier Low Taek Jho and his associate.
