Can international banks be held liable in 1MDB controversy?

Lawyers said to be studying whether those entangled in the scandal can be held accountable for negligence and breaches of duty.

Does 1Malaysia Development Berhad (1MDB) or the Federal Government have a right of recourse against international banks for the alleged dissipation of its moneys for negligence and breach of duties?

That is the question that lawyers are asking themselves as they contemplate the next possible stage of the 1MDB saga that has gripped Malaysia for much of this year, the Sarawak Report claims.

Potential plaintiffs who may attempt to bring such a legal action may include the Government of Malaysia and Bank Negara Malaysia (BNM), who complains that its laws had been violated when money was transmitted out of the country.

Potential defendants may include Goldman Sachs, which reportedly made upwards of US$500 million from a series of three bond issues for 1MDB. The commission paid is believed to have been well over the norm for bond deals, SR claims further.

Goldman Sachs is already being pursued by the Libyan Investment Authority (LIA), the Sarawak Report claims, after the latter allegedly lost big money in much the same way as 1MDB did.

In that case, LIA is claiming that the investment bank conducted itself in a manner prejudicial to its client and that its officials were deliberately misled into making disastrous and expensive decisions that purportedly benefitted the bank and other parties at the public’s expense.

Even Greek authorities are reportedly looking into whether they have a possible cause of action against the international banking system for wrongful conduct on their part which may have led to the draining of the bankrupt nation’s coffers.

Several other reputable international banks have been seen in recent months to be invariably tangled up in the 1MDB fiasco. These include Switzerland’s BSI, Deutsche Bank, Abu Dhabi’s Falcon Bank, Coutts, which is based in the United Kingdom, and the American giant, JP Morgan.