Abu Dhabi’s leviathan sovereign wealth fund has delayed its future activities with Goldman Sachs, owing to the 1MDB corruption mess.
The $225 billion-plus Mubadala Investment Co.’s decision comes as the investment banker has been tied to a multibillion-dollar money laundering scandal centered on Malaysian sovereign wealth fund 1Malaysia Development Berhad.
The Abu Dhabi organization’s International Petroleum Investment Co., and Aabar subsidiaries have been suing Goldman over the issue since November. The case alleges Goldman tried to corrupt petroleum business executives to further its business with the Malaysian fund.
“We have suspended any activities with Goldman Sachs pending [the] outcome of the litigation,” said Brian Lott, a spokesman of Mubadala Investment Co. He said future Goldman operations were “pending” on the litigation’s outcome. Deals signed before Mubadala sued will continue.
Suspensions came after the Malaysia Securities Commission issued a “show-cause” letter to the bank’s Malaysian unit, asking Goldman to explain why it shouldn’t face disciplinary action, adding that it can put sanctions, civil enforcement proceedings, and criminal prosecutions on the bank.
In 2015, Mubadala’s petroleum company promised billions of dollars in bonds arranged by Goldman, to be issued by 1MDB. This did not happen. Instead, money went missing and two ex-bankers, Tim Leissner and Roger Ng, were indicted by the US Department of Justice. The Malaysian fund defaulted and the nation filed criminal charges against Leissner and Ng, contending that the two helped misappropriate $2.7 billion in bonds in 2012 and 2013.
Following the default, Malaysia’s government in Kuala Lumpur agreed to repay the International Petroleum Investment Co. in a settlement at the time. That is currently being challenged by the country’s new government.
Leissner plead guilty to two counts of conspiracy to commit money laundering and bribe officials. Ng’s lawyer said his client will plead innocent.
But what of the scheme’s alleged mastermind?
Jho Low is wanted by the Malaysian government and believed to be hiding in China. The supposed ringleader allegedly funded a lavish lifestyle with the money and invested in New York’s Park Lane Hotel (formerly owned by real estate mogul Steve Witkoff), where Mubadala owns a stake, according to The Real Deal.
Analysts say scandal-related losses could total $5 billion. The Malaysian fund has been linked to corruption and money laundering activities in at least six countries.
Mubadala could not be reached for direct comment while Goldman Sachs declined comment.
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