A Malaysian Bank's Investor Just Sued Goldman Sachs For Trying To Curry Favour With Najib
The lawsuit alleges Goldman Sachs conspired to effect USD1.7 billion sale.
By Sadho Ram — 30 Jul 2016, 04:45 PM
In a lawsuit filed with the New York State Supreme Court on Tuesday, Goldman Sachs Group Inc is now accused of selling out a client by conspiring to help a Malaysian bank buy a rival to curry favour with PM Najib in connection with fundraising for 1MDB
The lawsuit was filed by Primus Pacific Partners, a private equity firm.
The Hong Kong-based firm alleges that Goldman Sachs and its then-Managing Director in Southeast Asia, Tim Leissner, of conflict of interest in advising a bank merger back in 2011 that happened between Hong Leong Bank and EON Capital, which was part-owned by Primus Pacific Partners.
EON Capital was sold to Hong Leong Bank for USD1.7 billion. The lawsuit alleges that Goldman and Leissner had concealed their close relationship with Najib and 1MDB when the bank was hired to advise the sale of EON Capital.
The lawsuit alleges that Tim Leissner failed to disclose his and Goldman's ties with PM Najib when advising EON Capital on how to respond to a USD1.7 billion takeover offer from Hong Leong Bank
Goldman Sachs instead advised EON to sell itself for a "woefully deficient" price even though EON could have received more money from other bidders because Najib's brother, Nazir, Chairman of CIMB Group, sat on Hong Leong's Board.
Leissner and Goldman, according to the lawsuit, were trying to bolster their standing with Najib who "had close family and business ties with Hong Leong Bank" giving him an interest in the success of Hong Leong Bank's takeover of EON as the merger would "enrich" his brothers Nazim Razak, a Hong Leong Director and Nazir Razak.
However, neither of Najib's brothers were named as defendants in the lawsuit.
Goldman Sachs, which acquired a licence to operate in Malaysia in December 2009, a year before the EON deal took place, helped 1MDB raise USD6.5 billion through bond offerings and received unusually large fees to do so, The Wall Street Journal reported.
Primus Pacific Partners is seeking USD510 million in damages.
Primus “previously lost its challenge in the Malaysian courts seeking to stop a transaction involving a Malaysian company, which was then approved by shareholders,” Andrew Williams, a Goldman spokesman, said in an email statement on Tuesday.
“We will vigorously contest this misguided additional lawsuit in New York court.”
nytimes.com