Goldman Sachs is facing a controversy that links them to a multi-million dollar international fraud in Malaysia. The Malaysian government claims that the bank helped to carry out the fraud despite the companies claims that rogue bankers are to be blamed.
Lim Guan Eng, the finance minister of Malaysia, said that the nation suffered an extremely large loss under Goldman Sachs financial advisory. He added that the firm should know where the money went and he advised Goldman Sachs to come to terms with acts.
Goldman Sachs is known because of its power and influence globally. Malaysia demands $7.5 billion in compensation from the company. The government also imposed penalties against the bank. The scandal is one of the most serious crises the company faced in its 149-year history.
David M. Solomon, the banks newly appointed chief executive released the bank's fourth-quarter results which are expected to focus on the issue. The bank is currently charged with civil and criminal cases around the world in relation to the controversy they faced because of the 1Malaysia Development Berhad (1MDB) fund in which the United States prosecutors claimed as a slush fund for Malaysia's recent Prime Minister, Najib Razak, and other government officials. New York officials issued subpoenas for some Goldman bankers. The bank discussed possible fines with prosecutors, and, recently, its lawyers in Malaysia made efforts to reach out the country's attorney general.
The 1MDB fund was raised by Mr. Najib in the name of raising money for Malaysia's development projects. Prosecutors, however, claimed that billions of dollars were transferred to the personal accounts of the prime minister, other officials, and a flamboyant Malaysian financier known as Jho Low.
In December, the Malaysian government sued the bank with criminal charges that accuse the bank of defrauding investors in the effort of raising more than $6 billion for 1MDB. The bank's defense said that "certain members of the former Malaysian government and 1MDB lied to Goldman Sachs. The bank assured that they are willing to face the charges against them.
The bank said that under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which they intend to vigorously contest.
Malaysia's Justice Department announced in November that one former senior Goldman Banker was guilty. They also filed bribery and money laundering cases against another.
The controversy led to the ouster of Prime Minister Najib and he was replaced by Mahathir Mohamad. He is a 93-year-old former prime minister.
