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Malaysia Is Not Buying What Goldman’s Selling This Time

$6.5 billion in bond deals? Sure. This cockamamie story about how you didn’t know people were stealing almost half of it? No.
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Not a place Goldman is particularly interested in visiting. Two hundred percent. [CC BY-SA 2.5], from Wikimedia Commons

Not a place Goldman is particularly interested in visiting. Two hundred percent. [CC BY-SA 2.5], from Wikimedia Commons

Here at Dealbreaker, we don’t know much about Malaysian law. Maybe our colleagues over at Above the Law do, but we didn’t ask them. Instead, we spent about 45 seconds perusing Wikipedia, where we learned that the country employs a British-style common law system, with much of its legal system inherited from its former colonial masters or based on the legal systems of others who threw off Albion’s yoke, such as Australia and India. We learned that there’s Shariah law for Muslims, although for reasons that will become clear shortly that’s probably not of great interest to us today. We also were pleasantly surprised to find that the Malaysians are in the process of abolishing capital punishment, which certainly makes the country’s legal system seem more humane and less capricious than, say, Texas’. All in all, it doesn’t sound that bad, which is perhaps why Singapore couldn’t stand to be part of the country for any more than two years. Still, this sounds pretty bad.

Malaysia filed criminal charges against Goldman Sachs on Monday, accusing the giant Wall Street bank of making false and misleading statements….

Goldman misled potential investors in its marketing materials for 1MDB bonds in violation of Malaysia’s securities laws, Mr. Thomas said. Goldman benefited from its work with 1MDB and received fees that were “several times higher than the prevailing market rates,” he added. Those fees in turn led to fat bonuses and increased the bank’s ranking in Asia.

Goldman has “fallen far short of any standard,” Mr. Thomas said in a statement. “They have to be held accountable.”

That’s very much not the story that David Solomon and Lloyd Blankfein are telling, although it seems like it’s probably in line with the story ex-Goldmanite Tim Leissner is telling the U.S. Justice Department. Leissner, too, was indicted in Malaysia, as was another Goldman vet, Roger Ng, who may or may not be regretting his choice to fight extradition from Kuala Lumpur to Brooklyn. A former 1MDB executive was also charged, as was deal mastermind, fixer, go-between and party-thrower extraordinaire Jho Low, who does not sound like he’ll be availing himself of the hospitality of Malaysian (or American) authorities any time soon.

Mr. Low’s lawyers said in a statement that he was innocent and that he would not travel to places “where guilt has been predetermined by politics….” Mr. Low is believed to be in China, though his exact location is not known.

Goldman and the rest of them join former Malaysian Prime Minister and husband of diamond enthusiast Rosmah Mansor Najib Razak in the dock. Can it be long before a certain Australian supermodel joins them?

The huge sums of money that were stolen bought much more than tiaras, including a $250 million yacht, a $35 million Bombardier jet and a see-through grand piano that is currently sitting in the living room of the supermodel Miranda Kerr.

Anyway, we’re guessing Goldman doesn’t know that much more about Malaysian law than we do, but whatever they are, the Elect are quite sure they didn’t break them.

“We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case,” he said.

Speaking of getting defensive...

“The path of the market next year will depend on investor perception of the longevity of the current economic expansion,” strategists led by David Kostin said in a note released late on Dec. 14. “Investors should increase portfolio defensiveness.”

Malaysia Files Criminal Charges Against Goldman Sachs Over 1MDB Scandal [NYT]
Goldman Says It's the Time for Stock Investors to Get Defensive [Bloomberg]

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