Malaysia charges Goldman Sachs figures in 1MDB scandal

Aug. 9 (UPI) -- Prosecutors charged 17 current and former Goldman Sachs employees Friday with charges connected with a long-running corruption investigation into a Malaysian development firm.

Malaysian prosecutors said directors at three Goldman Sachs subsidiaries were in charge during a period when the bank made three bond offerings to the government-run development company 1Malaysia Development Berhad. They accused Goldman Sachs and some of its bankers with misleading investors about large bond sales and involvement in $2.7 billion that was illegally diverted from the 1MDB fund.

Goldman Sachs International CEO Richard Gnodde was among several named in the charges.

"The accused were directors of these three Goldman Sachs subsidiaries between May 2012 and March 2013, the period during which acts giving rise to the Section 179 charges against their companies took place," the Malaysian attorney general's office said Friday.

"Custodial sentences and criminal fines will be sought against the accused ... given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds."

A Goldman Sachs spokesman in Hong Kong said the Malaysian charges are inappropriate.

"We believe the charges announced today ... are misdirected and will be vigorously defended."

Malaysia filed criminal charges last year against the investment bank that said it had misled investors when it arranged $6.5 billion in bond sales from 1MDB. Goldman Sachs could face fines totaling $2.7 billion and $600 million in fees, Malaysian officials said at the time.