Malaysia was cheated by Goldman Sachs, says Dr M

KUALA LUMPUR: Malaysia was “cheated” by Goldman Sachs Group Inc as a result of the firm’s transactions with the country’s scandal-tainted investment fund 1MDB, according to Prime Minister Dr Mahathir Mohamad.

“Obviously we have been cheated,” Mahathir said in an interview with CNBC, in response to a question about the restitution Malaysia might seek from the US bank.

“Of course there is evidence that Goldman Sachs has done things which are wrong,” he added.

Goldman Sachs is facing increasing scrutiny after at least three former senior bankers were publicly implicated by the US Department of Justice this month as part of a probe into a multi-year criminal enterprise that included bribes of officials and money laundering. The firm has said it’s cooperating with the investigations and may face “significant” fines.

The Malaysia probe focuses on 1MDB and the US$6.5 billion it raised in 2012 and 2013, during the leadership of Mahathir’s predecessor, Najib Razak. Goldman Sachs handled the deals, reaping almost US$600 million in fees.

Mahathir said he didn’t know how much restitution Malaysia might seek from the US bank, adding that the firm’s compliance function “doesn’t work very well”.

Shares of Goldman tumbled the most since 2011 yesterday after Finance Minister Lim Guan Eng demanded a “full refund”.

Asked whether the Wall Street firm might be barred from doing business in Malaysia, Mahathir replied: “We are watching.”