The suspension of business by Abu Dhabi state investor Mubadala comes as the emirate is embarking on a privitazation spree, and follows a civil legal action filed by a subsidiary against the U.S. bank.
Abu Dhabi state investor Mudabala is suspending new business dealings with Goldman Sachs, pending the outcome of a lawsuit filed by its subsidiary, International Petroleum Investment Co (IPIC), against the U.S. bank for losses suffered through its dealings with 1 Malaysia Development Berhad (1MDB), Reuters reported on Friday.
Mudabala plays a key role in Abu Dhabi’s investment activity. It manages some $225 billion in assets, and holds stakes in the emirate's largest companies, as well as in a range of global petrochemical and energy firms like Austrian giants Borealis and OMV, and Energias de Portugal according to its website.
The lawsuit, filed in November in New York, alleges that Goldman played a role in trying «to corrupt» former executives of IPIC and its subsidiary Aabar Investments, and «mislead» IPIC and Aabar as it tried to further its business with 1MDB.
Privatization Push
According to Reuters, Goldman ranked among the top banks for takeover advice in Abu Dhabi. It advised a government steering committee that oversaw a merger between Aldar Properties and Sorouh Real Estate in 2013, and worked on a merger valuation plan for the Abu Dhabi and Dubai bourses in 2014, which was ultimately shelved.
Abu Dhabi is in the midst of a privatization push of several state companies as the emirate attempts to revive a sluggish economy. Mudabala was also planning an IPO of Emirates Global Aluminium, the UAE's biggest industrial company outside the oil and gas sector.
A Wells Fargo Securities analyst quoted by Reuters said that losses related to the scandal could cost Goldman up to $5 billion.
