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“Unfortunately and tragically, a number of corrupt officials treated this public trust as a personal bank account,” Attorney General Loretta Lynch said at a news conference in Washington. The civil action and asset seizures represent the “largest single action ever brought” by the Justice Department’s six-year-old Kleptocracy Asset Initiative, she said.
Some of the money was handled by international banks including Goldman Sachs Group Inc., JPMorgan Chase & Co., Standard Chartered Plc and Deutsche Bank AG.
The U.S. complaints also lay out how a handful of global banks, while not accused of wrongdoing, were ensnared as hundreds of millions bounced between a web of shell companies. Money was pilfered from the government fund based on false representations made by 1MDB officials and representatives of the shell companies, prosecutors said. Even when bank officials raised questions about the beneficiaries of various accounts, compliance departments were unable to detect or halt the alleged fraud.
Goldman Sachs said in a statement: “We helped raise money for a sovereign wealth fund that was designed to invest in Malaysia. We had no visibility into whether some of those funds may have been subsequently diverted to other purposes.”
Deutsche Bank declined to comment as did JPMorgan, which was also mentioned in the documents. Standard Chartered said it is cooperating with all relevant investigations and declined to comment further.