1mdb Goldman Sachs Seek Dismissal Of Shareholder Suit

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Goldman Sachs Group Inc’s board of directors are seeking a US federal court dismissal of a shareholder derivative suit filed in relation to the bank’s alleged links to the multibillion-dollar 1MDB scandal
According to legal news site Law360, the February suit by a pension fund from Georgia pertains to the bank's role in three bond sales in 2012 and 2013 for the sovereign wealth fund founded by former prime minister Najib Abdul Razak
The suit, filed in New York, alleged cursory investigations could have alerted the bank that the “highly suspect” offerings had been secured through alleged bribes linked to high-ranking Malaysian and Abu-Dhabi officials
The US Department of Justice (DOJ), which had been investigating the scandal, has stated that Goldman generated about US$600 million in fees for its work with 1MDB, including the three bond offerings that raised US$6.5 billion
Law360 reported yesterday that the board, in its motion, argued the suit failed to link the bank’s directors to any purported wrongdoing in that regard
Rogue employees blamedInstead, it relied on blame pinned on two specific Goldman employees who had “concealed their misconduct"
This is in reference to former Goldman executives Tim Leissner and Roger Ng. Leissner has pleaded guilty to criminal charges by the DOJ, while Ng pleaded not guilty, although the latter is reported to be negotiating a plea bargain with prosecutors
"Presupposing that a company's directors acted improperly, which is all the complaint does, simply because of misconduct by company employees does not comport with (applicable) law," the directors are quoted saying in the report
The derivative suit “demands that Goldman's 11-person board return all salaries and compensation they received while the bank conducted the ‘extremely suspicious’ offerings and didn't act as ‘numerous red flags’ arose in the ensuing years"These supposed red flags include the US Federal Reserve warning Goldman in 2014 about inadequate vetting, or when Goldman's former Southeast Asia chairman, Leissner, was subpoenaed in 2016,” Law360 reported
However, the Goldman board reportedly responded that nothing in the suit suggested conflict of interests among its directors, that the pension fund was legally obligated to bring its demands to the board before filing and did not specify any inadequacy with the bank’s controls and risk management procedures
The board said: "Instead, plaintiff surmises that, because of employee misconduct, the director defendants must have failed to establish sufficient controls.”Grappling with the 1MDB falloutThe bank has been dealing with the fallout as a result of the DOJ’s investigation on 1MDB and prosecution involving Leissner and Ng, as well as the duo’s involvement with fugitive businessperson Low Taek Jho, or Jho Low, who is believed to be the mastermind behind the scandal
Low has denied any wrongdoing in relation to 1MDB, in the US and in Malaysia
In December, it was reported that investors in the US have filed a class action lawsuit against the bank and three executives.In a recent interview, Goldman CEO David Solomon stated the bank “owned” the fact it had hired Leissner, who turned out to be a “criminal”
He denied that Goldman was discussing any potential guilty plea with the DOJ over its alleged role in the scandal. - Mkini

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