MUMBAI (Nov 28): Goldman Sachs may wind up paying twice for 1MDB. Abu Dhabi's sovereign fund is suing the US investment bank in New York for its role in the Malaysian fund scandal. The damages sought could exceed Goldman's average annual net profit over three years of US$5.4 billion ($7.4 billion). The longer the fight drags out, the worse the fallout looks.

Aggrieved investors smell blood after former Goldman partner Tim Leissner pleaded guilty to conspiring to launder money and other charges filed by US authorities. New revelations in The New York Times that then-chief executive Lloyd Blankfein met privately with Jho Low, the alleged mastermind of the scandal, alongside an Abu Dhabi fund executive will weaken any defence that this was the work of rogue employees.

Abu Dhabi's lawsuit comes on top of growing expectations of a hefty settlement with the US Department of Justice. Goldman could pay a fine of up to US$1.2 billion plus return US$600 million in fees and revenue the bank made arranging three 1MDB bonds, reckons a Morgan Stanley banks analyst. Two of those bonds were jointly guaranteed by International Petroleum Investment Company, which has now been folded into Mubadala, another Abu Dhabi fund.

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