An Abu Dhabi sovereign wealth fund has sued Goldman Sachs over the 1Malaysia Development Berhad scandal, accusing the US bank of bribing its officials during a “massive global conspiracy”.
The International Petroleum Investment Company, a former partner of the 1MDB fund, filed a lawsuit in New York on Wednesday seeking unspecified punitive damages from Goldman and individuals, including Tim Leissner, a former partner at the bank who has pleaded guilty to conspiracy charges over the affair.
In 2015, IPIC guaranteed billions of dollars of bonds arranged by Goldman and issued by 1MDB. After the Malaysian fund defaulted, the government in Kuala Lumpur at the time agreed to repay IPIC in a settlement that has since been challenged by the new government.
The long-running 1MDB scandal, in which high-ranking Malaysian officials including former prime minister Najib Razak have been accused of helping loot $4.5bn from the government fund, has spread beyond the country’s borders, ensnaring officials and executives around the globe. Mr Najib, who was charged this year, has denied all accusations.
Goldman’s role has come under increasing scrutiny since US prosecutors charged two former Goldman managing directors — Mr Leissner and Roger Ng — for their alleged involvement in the scheme and claimed one current Goldman partner was a co-conspirator.
IPIC argued in the lawsuit that Goldman bribed Khadem al-Qubaisi, IPIC’s former managing director, and Mohammed al-Husseiny, chief executive of Aabar, IPIC’s subsidiary, to induce them to act against the fund’s interests as part of “a massive, international conspiracy to embezzle billions of dollars” from 1MDB.
In exchange for bribes, Mr Qubaisi and Mr Husseiny agreed to manipulate IPIC and Aabar, misusing the companies’ names and infrastructure to further the scheme, the suit alleged.
IPIC said it had also filed criminal complaints in Abu Dhabi against the two men. Mr Qubaisi, who denies the allegations, has been detained in the United Arab Emirates for 26 months, his lawyer Michael O’Kane said. “It is extraordinary if he has now been charged when he has never been subject to a proper investigation in the UAE into the 1MDB matter,” Mr O’Kane said.
Mr Husseiny, who is also in detention, has not been available for comment.
Goldman has insisted it had no knowledge of a bribery and embezzlement scheme that US prosecutors claimed saw about $2.7bn plundered from 1MDB after the bank helped the state-backed fund raise $6bn in 2012 and 2013. Goldman said it was “in the process of assessing the details” of the IPIC lawsuit and expected to contest it “vigorously”.
Shares in Goldman have fallen almost 14 per cent in the past month, as investors fretted about the reputational and financial fallout for the bank.
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