Mubadala Investment, Abu Dhabi's largest wealth fund, has revealed that it is now cutting all ties with Goldman Sachs over its alleged participation in the massive Malaysian corruption scandal. The company revealed in a public statement that it will no longer be doing any new business with the investment back in New York City as its involvement in the multibillion-dollar scandal may negatively affect their current partnerships.
Aside from cutting ties with the bank, Mubadala Investment had also filed a lawsuit against Goldman Sachs. The lawsuit was filed through the company's subsidiaries, International Petroleum Investment Company (IPIC) and Aabar. Mubadala Investment alleges that Goldman had wrongly implicated the IPIC in their scheme to launder billions of dollars from Malaysia's 1Malaysia Development Berhad (1MDB).
In a statement made to the media, Mubadala revealed that they have suspended all activities related to Goldman Sachs, pending the result of the lawsuit. The company, however, had explained that all of the deals that were made prior to the filing of the lawsuit will still continue until they are finished. Losing the business of Mubadala will be dealing a major blow to the investment bank given its influence on global investments. Mubadala reportedly controls more than US$225 billion in assets and is a major player in the industry.
In December, Malaysian prosecutors formally filed criminal charges against Goldman Sachs and two of its employees for allegedly playing a vital role in the 1MDB scandal. According to the court filing, the bank and its employees allegedly underwrote hundreds of millions of dollars through bond sales. The lawsuit is also requesting that the company pay over US$3.3 billion in fines to the Malaysian government.
The Malaysian scandal, currently considered as one of the biggest financial scandals in history, involved Malaysia's sovereign wealth fund, 1MDB, Goldman Sachs, the country's prime minister, and several of the fund's investors. 1MDB was supposed to be used to raise money for the country's various infrastructure and government projects. However, those that have been accused allegedly siphoned off more than US$2 billion from the fund for their personal use. Investors such as Jho Low were also charged with using the fund to buy lavish items such as yachts, condominiums, buildings, and other assets.
Malaysia's prime minister, Najib Razak, has denied all the allegations against him. Goldman Sachs has also denied any wrongdoing. The company's CEO, David Solomon, previously released a statement in January apologizing to the public for the actions of the company's former employees.
