SHARES in Goldman Sachs, the investment bank at the centre of the 1MDB scandal, plunged yesterday following reports that Malaysia is seeking a refund of the US$600 million (RM2.5 billion) fees it earned helping the sovereign wealth fund raise money via bond deals, Bloomberg reports.

Its shares plummeted 7.5% to seven-year lows after Finance Minister Lim Guan Eng told BFM radio that Malaysia was counting on Goldman Sachs’ “indirect” admission of culpability and US laws against kleptocracy to win its case for a fee refund.  

“I would be happy if we can get around 30% net after (deducting) all the expenses incurred,” Lim said. 

Goldman Sachs helped 1Malaysia Development Bhd raise billions of dollars which allegedly were diverted to fund the lifestyle, businesses and acquisitions of “Malaysian Official 1” and his family and cronies.

“Plenty of negative headlines” are weighing on investors’ minds when it comes to the bank, KBW analyst Brian Kleinhanzl was quoted as saying.

Last week, the United States Department of Justice charged three people over the 1MDB case, two of whom are former Goldman Sachs bankers, and said a “high-ranking executive” of the bank was present at a November 2009 meeting with Low Taek Jho – an alleged mastermind and intermediary to the Malaysian fund.

Former Goldman Sachs CEO Lloyd Blankfein was soon identified as the high-ranking executive who met former prime minister Najib Razak with Low, better known as Jho Low, in tow in New York in 2009.

Goldman Sach faces the prospects of suits and probes that could top US$2 billion, including more than US$1 billion in relation to 1MDB matters, Bloomberg Intelligence analysts Elliott Stein and Jennifer Rie said in a report yesterday.

The firm’s shares declined 7.5% yesterday, its biggest one-day drop since November 2011, to close at US$206.30. – November 13, 2018.