Malaysia files charges against Goldman Sachs unit directors

Malaysia’s former Prime Minister Najib Razak leaves a court in Kuala Lumpur after his trial over alleged involvement related to 1MDB. (AFP)
Updated 09 August 2019

Malaysia files charges against Goldman Sachs unit directors

  • An estimated $4.5 billion was misappropriated from 1MDB between 2009 and 2014, according to the US Justice Department

KUALA LUMPUR: Malaysia has filed criminal charges against 17 current and former directors at subsidiaries of Goldman Sachs Group in a multi-billion-dollar corruption investigation at state fund 1Malaysia Development Bhd (1MDB), the attorney general said on Friday.

Goldman Sachs has been under scrutiny for its role in helping to raise $6.5 billion through bond offerings for 1MDB, the subject of corruption and money laundering investigations in at least six countries.

Friday’s charges were brought under a section of the Malaysian Capital Markets and Services Act that holds certain senior executives responsible for any offenses that may have been committed, Attorney General Tommy Thomas said.

“Custodial sentences and criminal fines will be sought against the accused ... given the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds,” Thomas said.

The individuals charged include Richard Gnodde, chief executive of Goldman Sachs International, and Michael Sherwood, former vice chairman of Goldman Sachs Group Inc. and co-chief executive officer of Goldman Sachs international.

Goldman Sachs said the charges were misdirected.

“We believe the charges announced today, along with those against three Goldman Sachs entities announced in December last year, are misdirected and will be vigorously defended,” a Goldman Sachs spokesman in Hong Kong told Reuters.

The bank has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of transaction proceeds.

Last year, Malaysia filed criminal charges against Goldman Sachs and two of the US bank’s former employees in connection with 1MDB. The US Department of Justice is investigating the bank for its role as underwriter and arranger of the bond offer.

An estimated $4.5 billion was misappropriated from 1MDB by fund officials and their associates between 2009 and 2014, the US Justice Department has said.

Tim Leissner, a former partner of Goldman Sachs in Asia, pleaded guilty last year to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act and agreed to forfeit $43.7 million.

Malaysia has said it was seeking up to $7.5 billion in reparations from Goldman over its dealings with 1MDB, set up in 2009 by then prime minister Najib Razak.

Najib, ousted last year, is facing dozens of criminal charges related to 1MDB. He has pleaded not guilty and denied wrongdoing.

Costco to open first store in China tomorrow

A staff member checks items at a Costco store during a media day in Shanghai ahead of its official opening on Tuesday. (AFP)
Updated 4 min 34 sec ago

Costco to open first store in China tomorrow

  • Local competitors ‘stealing ground with popular homegrown retailers’

SHANGHAI: The US retail giant Costco is diving into the thorny area of food retail in China with its first store opening this week, but analysts warn it faces a tough ride as it looks to succeed where a series of international retailers have failed. The move also comes at a challenging time with Beijing and Washington engaged in a tense trade war that has seen them swap punitive tariffs on hundreds of billions of dollars of two-way trade.
China has proved a brutal battleground for overseas food retailers in recent years, with many failing to understand consumer habits and tastes as well as local competitors building a stronger presence.
In June, French supermarket giant Carref


China has proved a brutal battleground for overseas food retailers in recent years, with many failing to understand consumer habits and tastes as well as local competitors building a stronger presence.

our agreed to sell 80 percent of its China business to domestic giant Suning after repeated losses.
And German wholesaler Metro is in the process of selling its operations to a local bidder and British grocery giant Tesco pulled out of the Chinese market in 2014.
“The Chinese market is very complicated and requires retailers to innovate and localize,” said Jason Yu, general manager of Kantar Worldpanel China.
But Costco thinks it can avoid the malaise that has plagued others with its “no-frills approach” and bulk-buy strategy.
The retailer will throw open its doors on Tuesday, five years after making its first online foray into China through Alibaba’s cross-border e-commerce platform Tmall Global.
Richard Zhang, Costco’s senior vice president for Asia, told AFP they had a “conservative” goal to sign up at least 100,000 new members for the new store, which is in a suburban district of Shanghai with a 2 million-strong population.
And Zhang said they had taken time to make sure that consumers in China knew their brand and the market was mature enough.
Costco will be targeting China’s affluent growing middle class, who know the brand from international travels.
However, analysts warned that local competitors are stealing ground with popular homegrown retailers such as Alibaba’s bricks-and-mortar Hema stores integrating online and offline shopping.
“Local retailers are reaching out to customers via all distribution channels while foreign retailers are not so flexible to adapt to new situations,” said Yu.
“The old way of a large and all-inclusive hypermarket doesn’t work in China.”
Chih-yuan Wang, retail research director at Mintel China Reports, warned that many foreign retailers adapted too slowly and “still didn’t catch up with China’s rapid ecommerce craze where customers go shopping on mobile phones.”
“The cost of (later) building a home delivery service is very high and may affect Costco’s basic strategy to provide the lowest available prices,” he said.
Costco’s big rival, membership-based warehouse Sam’s Club from Walmart, has over two decades of history in China and is still on the expansion trail with plans to reach 40 stores by the end of next year.
But Zhang said the fact that Chinese consumers are already familiar with a membership supermarket model could work to Costco’s advantage.
“Chinese consumers are ready to pay for a membership card that grants them an exclusive privilege to buy at a warehouse store, it’s not a new concept in the country,” said Zhang. “A mature market saves us efforts in educating customers.”