The United Arab Emirates (UAE) is suing The Goldman Sachs Group, Inc., one of the largest investment banks in the world, and others to recover losses suffered through its dealings with Malaysia's scandal-wracked sovereign wealth fund, 1Malaysia Development Berhad, or 1MDB.
Goldman Sachs was the financial adviser for this transaction. The New York City-based firm earned more than $600 million in fees for bonds it raised for 1MDB.
The lawsuit was filed at a New York state court on Wednesday by International Petroleum Investment Company (IPIC), an Abu Dhabi sovereign wealth fund. Abu Dhabi is the capital of the UAE. The IPIC lawsuit also involves its subsidiary, Aabar Investments. Goldman Sachs Group and three of its Asian subsidiaries were named as defendants in the lawsuit.
Goldman Sachs has repeatedly denied any wrongdoing and is cooperating with authorities in Malaysia and the United States investigating the scandal, which also involves former Malaysian Prime Minister Najib Razak.
1MDB is a strategic development company totally owned by the Malaysian government. It was established by Najib when he took power in 2009 to source funding for Malaysia's long-term economic development and promote foreign direct investments.
Najib allegedly embezzled $681 million from 1MDB during his years in power. He was arrested and charged in Malaysian courts for crimes related to the 1MDB scandal. He is currently out on bail.
The U.S. Department of Justice, which is also suing 1MDB, claims $4.5 billion was laundered from 1MDB over six years by Malaysian government officials led by Najib and others.
The New York lawsuit states that IPC and Aabar are seeking "damages and other appropriate relief for the significant financial exposure and losses ... suffered as a result of fraudulent and illegal acts." It accuses Goldman Sachs of engaging in an international conspiracy to embezzle millions of dollars from the 1MDB fund.
The plaintiffs allege that as part of that scheme, Goldman Sachs bankers bribed former IPIC and Aabar executives to join the conspiracy and act against the companies' interests. Former IPIC Managing Director Khadem Abdulla Al-Qubaisi and former Aabar CEO Mohamed Ahmed Badawy Al-Husseiny were named as defendants in the summons.
IPC and Aabar claim both men agreed to manipulate and mislead" their employers by misusing the firms' names, networks and infrastructure. They are also seeking legal costs, punitive damages and further awards as the court sees fit.
Goldman Sachs and its fellow defendants have 30 days to respond to the summons, either by submitting a notice of appearance or a complaint.
