Pass the Popcorn

Malaysia has formally filed criminal charges against Goldman Sachs for its role in the massive 1MDB scandal.

The scale of the scandal, and the Vampire Squid's involvement in the scandal, is huge, and as such, it's inconceivable that the most senior management at Goldman Sachs was unaware of what was going on.

All I want for New Years is Lloyd Blankfein frog-marched out of his office in handcuffs:

The breadth of Goldman Sachs ’ potential legal jeopardy in the 1MDB scandal keeps growing.

The U.S. Justice Department has already secured a plea agreement from the bank’s former chairman of its Southeast Asia business who said that evading compliance controls was part of the firm’s culture. The bank’s then-chief executive, Lloyd Blankfein, attended meetings that the shadowy Malaysian financier at the heart of the scandal was also present on at least two occasions, according to reports.

………

Now, the Malaysian government has filed its own criminal charges against subsidiaries of Goldman Sachs (GS) in connection to the 1MDB scandal, the country’s attorney general said in a statement.

The attorney general also said that charges would be filed shortly against a former partner of the bank and ex-chairman of its Southeast Asia business, Tim Leissner, and another former Goldman Sachs banker, Roger Ng.

………

The spokesman later added: “Certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel, and others about the use of proceeds from these transactions. 1MDB, whose CEO and board reported directly to the prime minister at the time, also provided written assurances to Goldman Sachs for each transaction that no intermediaries were involved. Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest. These charges do not affect our ability to conduct our current business globally.”

(emphasis mine)

The technical term for this is, "Willfull blindness".  They knew about the looting, but made sure not to look in the right direction.

In a November radio interview, Malaysia’s finance minister said the country would seek a $600 million refund on the fees it paid to Goldman Sachs for three bond offerings the bank underwrote in 2012 and 2013. Billions of dollars from those deals were allegedly siphoned off to private accounts and used to pay bribes, and were laundered through things like real-estate deals and Hollywood investments.
………

At the center of the alleged fraud is Jho Low, a financier with no formal role in the fund who nevertheless effectively controlled it, and Leissner, who said in his plea statement that he evaded the bank’s compliance controls to help Low divert money and that such actions were part of the bank’s culture.

Goldman Sachs underwrote the bonds and reaped around $600 million in fees from the deals—equal to about 10% of the total issuance, which is an astronomical fee for what was putatively debt issued by a sovereign wealth fund.

Leissner pleaded guilty to his role in shifting money out of 1MDB and of bribing various government officials in order to pull off the fraud in November but has yet to be sentenced. Low has also been charged but his whereabouts are unclear.

Goldman Sachs needs to be "Arthur Andersoned", and their corporate carcass needs to be hung from the ramparts as a warning to other malefactors.