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Federal Reserve Permanently Bans Goldman Sachs Banker Over Malaysian Fund 1MDB Scandal

Representative image: A man walks past the Federal Reserve Bank in Washington DC. (Reuters)

Representative image: A man walks past the Federal Reserve Bank in Washington DC. (Reuters)

The US Justice Department has said that more than $ 4.5 billion was stolen from 1MDB by high-level officials and their associates between 2009 and 2015.

New York: The Federal Reserve permanently barred a senior Goldman Sachs executive from the banking industry over the 1MDB scandal, the US central bank announced on Tuesday.

The Fed action affects Andrea Vella, who had been placed on leave amid a crackdown over 1MDB, the scandal-plagued Malaysian investment fund for which Goldman Sachs helped raise USD 6.5 billion. The Justice Department has said more than USD 4.5 billion was stolen from 1MDB by high-level officials at the fund and their associates between 2009 and 2015.

Vella "engaged in unsafe and unsound practices" by failing to take action over the involvement of Low Taek Jho in bond offerings in 2012 and 2013, the Fed said in an administrative order. Low, an alleged mastermind and intermediary to the Malaysian fund, "was a person of known concern to Goldman, and his involvement indicated heightened potential underwriting risks," the Fed said.

The Fed's action comes on the heels of earlier moves to permanently bar two former Goldman bankers, Tim Leissner and Roger Ng, from the industry. Goldman Sachs last month set aside USD 1.1 billion in legal costs, with most of the funds expected to go to 1MDB settlements.