How is Goldman Sachs involved?
Malaysia charged Goldman in December 2018 for its role in underwriting and arranging bond sales that raised US$6.5 billion for 1MDB in 2012 and 2013. The investment bank earned US$600 million for its service.
CEO David Solomon has apologised to Malaysia for ex-banker Tim Leissner’s role in the 1MDB scandal. Leissner, a former partner for Goldman Sachs in Asia, pleaded guilty in the US to conspiring to launder money and violate the Foreign Corrupt Practices Act.
Malaysian finance minister Lim Guan Eng rejected the apology and called for US$7.5 billion in reparations from Goldman. Lim said the apology was “necessary but not sufficient” and that the whole scandal had caused “agony and trauma suffered by the Malaysian people”.
Roger Ng, the other former Goldman employee facing charges, was arrested by Malaysian authorities.
How has it affected Malaysian politics?
In May 2018, Najib was driven from power after former prime minister Mahathir Mohamad recorded a stunning election victory. Running on an anti-corruption platform, Mahathir’s Pakatan Harapan unseated the ruling Barisan Nasional coalition, ending its 60 years in power.
The newly elected prime minister barred Najib and Rosmah from leaving the country and reopened the probe into 1MDB that was halted under Najib’s rule.
Malaysian authorities seized vast sums of cash and luxury goods with an estimated value of up to US$273 million from properties linked to the former leader.
Najib was arrested on July 3, 2018 but has repeatedly maintained his innocence. He said the funds in his personal accounts were a donation from Saudi Arabia’s royal family and that the items seized in home searches were mostly gifts to his wife and daughter.
The change in government in Malaysia has affected the country’s diplomatic relations with China.
In January 2019, China rejected a Wall Street Journal report saying Chinese officials offered to bail out 1MDB and convince other countries to drop their 1MDB-related probes in return for approval of lucrative infrastructure projects under Beijing’s “Belt and Road Initiative”.
Mahathir says his government is still negotiating with China over the US$20 billion East Coast Rail Link (ECRL) deal despite a screenshot of a letter shared by Najib on Facebook suggesting the ECRL had been cancelled.
Anwar Ibrahim, who is expected to succeed Mahathir as prime minister, said Goldman must be held accountable for its role in the 1MDB scandal. Both Mahathir and the would-be prime minister have presented a united front to the public in Malaysia’s anti-corruption drive.
