Malaysia issues Goldman Sachs with show-cause letter on 1MDB probe

Goldman Sachs has consistently denied wrongdoing on the 1MDB scandal. (Reuters)
Updated 14 March 2019
0

Malaysia issues Goldman Sachs with show-cause letter on 1MDB probe

  • A show-cause letter typically requires the recipient to explain why they should not be subject to disciplinary action
  • Goldman Sachs has consistently denied wrongdoing on the 1MDB case

SINGAPORE: Malaysia’s securities commission said on Thursday that it has issued a show-cause letter to Goldman Sachs, which is embroiled in multi-jurisdictional investigations into Malaysian state fund 1Malaysia Development Berhad (1MDB).
A show-cause letter typically requires the recipient to explain why they should not be subject to disciplinary action.
“We have issued a show cause to Goldman Sachs,” the chairman of the Malaysia Securities Commission, Syed Zaid Albar, said at a press conference on Thursday.
However, he did not say when the letter was issued or provide any details about its contents. If the commission finds a financial institution violated regulations, its powers include issuing fines or revoking operating licenses.
Goldman Sachs did not immediately respond to a request for comment.
Apart from facing civil lawsuits, Goldman Sachs is being investigated by Malaysian authorities and the US Department of Justice for its role as underwriter and arranger of three bonds that raised $6.5 billion for 1MDB.
Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB had lied to the bank about the use of the proceeds from the bond sales.


Pakistani central bank lifts interest rate as inflation bites

Updated 20 May 2019
0

Pakistani central bank lifts interest rate as inflation bites

ISLAMABAD: Pakistan’s central bank raised its key interest rate to 12.25% on Monday, warning that already soaring inflation risked further rises on the back of higher oil prices and reforms required for a bailout from the International Monetary Fund.
The 150 basis points increase follows a preliminary agreement last week with the IMF for a $6 billion loan that is expected to come with tough conditions, including raising more tax revenues and putting up gas and power prices. It was the eighth time the central bank has increased its main policy rate since the start of last year.
With economic growth set to slow to 2.9% this year from 5.2% last year, according to IMF forecasts, the rate rise adds to pressure on Prime Minister Imran Khan, who came to power last year facing a balance of payments crisis that has now forced his government to turn to the IMF.
Higher prices for basic essentials including food and energy has already stirred public anger but the central bank suggested there was little prospect of any immediate improvement.
Noting average headline inflation rose to 7% in the July-April period from 3.8 percent a year earlier, the central bank said recent rises in domestic oil prices and the cost of food suggested that “inflationary pressures are likely to continue for some time.”

 

It said it expected headline inflation to average between 6.5% and 7.5% for the financial year to the end of June and was expected to be “considerably higher” in the coming year. Expected tax measures in next month’s budget as well as higher gas and power prices and volatility in international oil prices could push inflation up further, it said.
It said the fiscal deficit, which the IMF expects to reach 7.2% of gross domestic product (GDP) this year, was likely to have been “considerably higher” during the July-March period than in the same period a year earlier due to shortfalls in revenue collection, higher interest payments and security costs.
Despite some improvements, financing the current account deficit remained “challenging” and foreign exchange reserves of $8.8 billion were below standard adequacy levels at less than the equivalent of three months of imports.
The central bank said it was watching foreign exchange markets closely and was prepared to take action to curb “unwarranted” volatility, after the sharp fall in the rupee over recent days that saw the currency touch a record low of 150 against the US dollar.
Details of what Pakistan will be required to do under the IMF agreement, which must still be approved by the Fund’s board, have not been announced but already opposition parties are planning protests.
As well as higher energy prices that will hit households hard, there are also expectations of new taxes and spending cuts in next month’s budget to reach a primary budget deficit — excluding interest payments — of 0.6% of GDP.
With the IMF forecasting a primary deficit of 2.2% for the coming financial year, that implies squeezing roughly $5 billion in extra revenues from Pakistan’s $315 billion economy, which has long suffered from problems raising tax revenue.

FACTOID

Pakistan’s economic growth is set to slow to 2.9% this year.