GOLDMAN Sachs issued a US$1.75 billion 1Malaysia Development Berhad bond guaranteed by the International Petroleum Investment Company (IPIC) without the latter’s approval, the Straits Times reports.

The bond was approved by senior IPIC officials, such as its then chief executive, Khadeem Al Qubaisi, instead of the board of the Abu Dhabi state-owned firm, which violates basic prerequisites for corporate entities, sources told the paper.

The bank acknowledged to ST in a written response that a resolution by the IPIC board was not obtained for the bond issue.

“The firm relied on documents provided by IPIC executives and legal opinions of outside counsel evidencing IPIC’s authority to enter into the guarantee,” it was quoted as saying.

The Straits Times said Abu Dhabi government officials did not respond to requests for comments.

The bond was issued for 1MDB in 2012 and was one of three bonds amounting to US$6.5 billion that the global bank arranged for the troubled Malaysian state investor.

Two bonds in equal tranches of US$1.75 billion and another of US$3 billion were raised to finance 1MDB’s investments in the power sector, and in economic activities involving Malaysia and Abu Dhabi.

Goldman Sachs earned more than US$600 million from these undertakings and the Malaysian government is seeking to recoup the funds through legal action.

Malaysia’s attorney-general on Monday filed criminal charges in the Kuala Lumpur High Court against Goldman Sachs International, two of its ex-bankers and key figures from 1Malaysia Development Bhd for fraud from the bond exercise. – December 20, 2018.