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Goldman Sachs bankers ‘cheated’ Malaysia over 1MDB: Mahathir

Goldman Sachs bankers ‘cheated’ Malaysia over 1MDB: Mahathir

Shares of the Wall Street powerhouse got clobbered on Monday after a top Malaysian official claimed the bank owed the country a "full refund" of $600 million for its role in an worldwide fraud masterminded by playboy financier Jho Low.

Asked if Malaysia will continue to take punitive measures against the United States investment bank, the Goldman Sachs Group, now under investigation by the DOJ over the fees it had secured in dealings with 1MDB, Dr Mahathir said: "We believe in the rule of law".

USA prosecutors filed criminal charges against two former Goldman Sachs bankers earlier this month.

Leissner and Ng have been charged with money-laundering and conspiring to bribe officials in Malaysia and Abu Dhabi to hire Goldman for lucrative consulting contracts. He agreed to hand over almost $44m (£33m).

Shares in the USA investment bank, which now also has retail arms in the United Kingdom and U.S., had their worst day in 7 years, falling 7.3 per cent to close at their lowest level in two years. Malaysia has been "cheated" by Goldman, Prime Minister Mahathir Mohamad said in a CNBC interview, adding that he's not ruling out a ban against the bank's local operations as he observes the ongoing investigations. Goldman Sachs handled the deals, reaping nearly $600 million in fees. The bank denied any wrongdoing on Monday.

On whether Malaysia had sent an official request to the DOJ to seek help on the refund, Dr Mahathir told reporters in Singapore that "it takes a little bit of time but they (DOJ) have promised that they will give back the money".

Michael DuVally, a Goldman spokesman in NY, declined to comment.

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"There is evidence that Goldman Sachs has done things that are wrong", Mahathir said in an interview with USA news channel CNBC aired on Tuesday.

However, Goldman Sachs denied all accusations.

He said the rate Malaysia received was about 100 basis points higher than the market rate. Its shares plunged 7.5 percent on Monday in the steepest drop since 2011.

Goldman Sachs stated that it was cooperating with the authorities and could possibly be looking at paying hefty fines.

Mr Lim did not say how Malaysia would seek to recoup any money beyond that he would leave the matter to Malaysia's attorney-general. He has been charged with corruption over the scandal and has pleaded not guilty.

Records show that Low, who remains at large, isn't in China on a Malaysian passport as previously thought, Lim told the BFM radio station.