9 November 2018
KUALA LUMPUR, Nov 9 — Goldman Sachs’ complicity in allegedly defrauding 1MDB appears to reach the very top of the US investment bank, with chairman Lloyd Blankfein now identified as the previously unnamed official who attended negotiations with the Malaysian firm.
According to Bloomberg, people familiar with the investigation into Goldman said Blankfein was personally involved in driving the investment bank’s pursuit of the Malaysian state investment firm’s patronage.
The US previously referenced an unnamed Goldman executive in its criminal indictments against former bankers Tim Leissner and Richard Ng, to which Leissner has pleaded guilty.
The indictments indicated that the executive — now independently identified as Blankfein — had sat in on meetings with Leissner and fugitive financier Low Taek Jho, the suspected mastermind in the 1MDB corruption scandal.
Blankfein stepped down as the chief executive of Goldman earlier this year; he remains the bank’s chairman at least until the end of the year.
According to US prosecutors, the investment bank generated an “above average” US$600 million in fees for its work with 1MDB, which included three bond offerings in 2012 and 2013 that raised US$6.5 billion. Leissner, Ng and others received large bonuses in connection with that revenue.
Leissner has pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act, and agreed to forfeit US$43.7 million (RM181.9 million).
Finance Minister Lim Guan Eng previously said Goldman was morally obligated to return the sum to Malaysia, while Datuk Seri Anwar Ibrahim — possibly Malaysia’s next prime minister — told Bloomberg TV that it would be “inexcusable” if the bank was complicit in the scandal.
Goldman chief executive officer David Solomon told an interview with Bloomberg TV in Singapore this week that it was “distressing” to find two of its former executives went around the bank’s policies and broke the law in their dealings with 1MDB.
Solomon made no mention of Blankfein’s role in the matter.
3 November 2018
NEW YORK: When then-prime minister Najib Razak visited New York in September 2013, a senior Goldman Sachs Group Inc official went out to greet him.
At the time, that would have seemed fitting: Malaysia had been good to Goldman Sachs. Three bond offerings from the country’s 1MDB wealth fund, controlled by Najib, had already generated about US$600 million in fees for the bank. But now, previously unreported details of that gathering at the Time Warner Center overlooking Manhattan’s Central Park could prove damaging for Goldman Sachs.
A federal filing unsealed on Thursday places Najib and a “high-ranking executive” from the bank in a meeting with several people the US now accuses of a massive global fraud – including a Malaysian financier who had been repeatedly flagged by the bank’s compliance teams.
Attendees included the Goldman Sachs banker who’d arranged the bond offerings, Tim Leissner, who’s now admitted to US authorities that he conspired to bribe officials to get the deals done and accepted some US$200 million of the proceeds into accounts he controlled. Also present was Low Taek Jho, the Malaysian businessman known as Jho Low whom the US accuses of masterminding the scheme to divert billions of dollars from 1MDB to private accounts, fine art, luxury toys and high-end real estate.
By the time the top Goldman executive met with Najib and Low on that sunny Wednesday in September, Leissner had been asked – and had denied – multiple times that Low was involved in the 1MDB offerings, according to US filings. Several compliance officers at Goldman had also shot down Leissner’s efforts to bring Low aboard as a client. Yet there was Low, an effervescent networker whose free-spending exploits were already tabloid fodder.
That wasn’t the end of Low’s work in New York. Three days later he returned to the Time Warner Center, where Najib was staying at the Mandarin Oriental hotel, according to the court filing, an FBI special agent’s affidavit filed under seal in June.
There, Low and a jeweller presented Najib’s wife, Rosmah Mansor, with a custom-made 22-carat pink diamond pendant and necklace, according to court documents. The jewels cost US$27.3 million. The money came from funds that were raised by Goldman for 1MDB and then diverted into accounts controlled by Low, according to the filings.
The US filings don’t identify many of the meetings’ participants by name. Leissner, Low, Najib and others are identifiable from previously disclosed details. The documents include several other references to senior Goldman Sachs officials who aren’t identifiable, including the one at the Time Warner Center meeting.
The latest documents may mean Goldman Sachs’s reckoning over the 1MDB affair is far from over. On Thursday, the bank placed Andrea Vella, its former co-head of investment banking, on leave. Court documents unsealed earlier in the day said an unidentified Goldman official in Asia conspired with Leissner, Low and another then-Goldman banker, Roger Ng, and had knowledge that bribes were being paid. Prosecutors’ description of the official lines up with that of Vella, who couldn’t be reached for comment.
Goldman Sachs has previously said it believed the money it was raising for 1MDB would be used for development projects. Through a spokesman, Goldman Sachs, which has said it’s cooperating with authorities, declined to comment. Najib didn’t immediately comment through a spokesman.
Over the next year or so, Goldman arranged two more fundraising rounds for 1MDB. Like the first, these were bond offerings, which generated higher fees for the bank than other forms of capital raising, Leissner said in his admission. In all, Leissner said in his guilty plea, more than US$200 million flowed into accounts controlled by him and his ex-wife, as part of a global flow of money that also allegedly bought a luxury yacht, paid for a movie production and bought jewels for Low’s love interests.
The next September brought Leissner, Low, Najib and the high-level Goldman executive together in New York, along with another 1MDB official and a relative of Najib. The purpose of the meeting, according to the FBI agent’s affidavit: To discuss more business opportunities for Goldman in Malaysia, including with 1MDB.
2 November 2018
It was in the interests of the United States to deal with 1MDB, therefore, as well as being the right thing to do in the minds of the humble officials and their political bosses, who sorted out this giant kleptocratic theft. Otherwise, the beneficiaries of corrupt billions – filtered without being taxed through the off-shore system – can start to negatively influence politics and decision-making in the United States and other recipient countries.
The criminally super-rich can become super-powerful: sponsoring political parties and so-called think tanks; bribing officials and confusing the public with a deluge of false information all to increase their own position and power by undermining democracy.
Kleptocracy is a Global Danger
Obama’s Attorney General, Eric Holder, introduced the Kleptocracy Asset Recovery Unit in 2014 to counter the threat of laundered billions finding their way into the United States, after decades during which global regulators had dangerously turned a relative blind eye to extra-judicial corruption and money laundering.
1MDB happens to have been one of the first major strikes by that unit of the Department of Justice and FBI. Last year the present Attorney General, Jeff Sessions, upheld the value of its work.
It is hugely significant that this department has now moved to indict senior figures within one of the United States’ own most powerful financial institutions, Goldman Sachs, who are now charged with actively conspiring with then Prime Minister Najib Razak’s agent, Jho Low, to steal billions and bribe officials in Abu Dhabi and Malaysia in order to make big kickbacks for themselves.
Those officials are stated as including ‘Malaysian Official One (MO1), ex-Prime Minister Najib Razak, and plainly also include the former Chairman and CEO of Abu Dhabi’s Aabar sovereign fund, who received vast kickbacks for siphoning money out of the Goldman bond structures (using the fund’s ownership of the private Falcon Bank).
“A three-count criminal indictment was unsealed today in federal court in the Eastern District of New York charging Low Taek Jho, also known as “Jho Low,” and Ng Chong Hwa, also known as “Roger Ng,” with conspiring to launder billions of dollars embezzled from 1Malaysia Development Berhad (1MDB), Malaysia’s investment development fund, and conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Abu Dhabi officials. As part of the three-count indictment, Ng is also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a major New York-headquartered financial institution (Financial Institution), which underwrote more than $6 billion in bonds issued by 1MDB in three separate bond offerings in 2012 and 2013, while Ng was employed at the Financial Institution as a managing director. Ng was arrested earlier today in Malaysia, pursuant to a provisional arrest warrant issued at the request of the United States. Low remains at large.” [DOJ Criminal Indictment]
The ‘Financial Institution’ referred to is clearly Goldman Sachs. In a related move at the start of this week, Malaysia’s own Attorney General challenged in the UK High Court a 2017 judgement by the private arbitration service the LCIA (London Court of International Arbitration) in favour of Abu Dhabi to the tune of some $4.5 billion, on the very grounds that the entire arrangement could plainly have been seen as a fraudulent attempt to steal Malaysia’s public money. Malaysia’s Attorney General ought by justice win his case.
Justice For Goldman Sachs?
In the process of facilitating all this theft, Goldman Sachs made one of the biggest series of profits in the history of banking out of three questionable bond issues for 1MDB, surreptitiously raised via opaque off-shore instruments to the detriment of transparency over the handling of public finances. The details are now laid out in the US criminal indictment, matters which were ignored for nearly a decade by the bank’s own hierarchy.
Although the financial world had politely wondered at the enormous payments secured by Goldman Sachs in raising $6.5 billion for 1MDB ($600 million in fees), no one at the bank appears to have examined or reviewed the deals arranged by their Asia Golden Boys, Tim Leissner and Roger Ng – any more than they had checked ‘Dr’ Leissner’s fake academic qualifications.
America’s most powerful bank at the very least failed to adequately scrutinise these eye-watering deals, which are now acknowledged to have been criminal by Leissner, who has pled guilty and agreed to cooperate.
The likelihood is worse, that some of the most senior figures were complicit (the bonuses that year were exponential all round) and/or there were systemic problems at the bank, that caused money laundering alerts to fail. Such systemic problems could hardly have been hard to detect by such a major institution concerned to stay within the law.
This Story Spreads Wider Than 1MDB
Malaysia’s mysterious Mr Ng has now finally also been arrested and will likely be shipped to the United State to face the music.
He ought to emulate his former boss and cut a deal. Mr Ng’s antics include a long career of collaboration with Malaysia’s worst kleptocrats, including equally obscure and complex off-shore financial deals involving Goldman Sachs and the Sarawak Government of Taib Mahmud.
Prior to that Mr Ng was a player in Deutsche Bank, which was also extensively in business with the Taib family fortune, particularly with regard to Kenanga Holdings, a jointly owned investment house with CMSB, Taib’s family owned conglomerate.
A thorough clean out of Malaysia’s dirty kleptocratic dealings is what is needed out of 1MDB and beyond that a thorough clean out of the global banks who have proven happy to deal with regimes like these. Ultimately, a thorough clean out of the off-shore system is required.
There is only one jurisdiction who can force this through and that is the Department of Justice of the United States.
The Wall Street bank’s work with 1MDB is under the spotlight after the US government alleged that billions of dollars were diverted from bond deals arranged by Goldman for the personal use of officials and some people associated with the state fund.
Goldman Sachs, which earned close to US$600 million (S$803 million) to arrange and underwrite the 1MDB bonds, has not been accused of any wrongdoing by US authorities. REUTERS
14 September 2018
(Sept 14): Former Goldman Sachs Group Inc. President Gary Cohn backed the U.S. bank’s dealings with embattled Malaysian state fund 1MDB while executives who questioned the transactions were sidelined, according to a new book.
Cohn supported the “potentially lucrative line of business” that some of its top Asia-based bankers were developing in Malaysia, said the authors of “Billion Dollar Whale,” to be released by Hachette Books on Tuesday. Those executives included Tim Leissner, the former Goldman banker who led the 1MDB bond sales, and Andrea Vella, who headed Goldman’s debt and structured finance business in Asia.
“The backing of a domineering and powerful personality like Cohn afforded significant cover to those involved in the 1MDB business and drowned out the voices of those who were uncomfortable with the plans to raise billions of dollars for the fund,” the authors wrote. Cohn left Goldman in 2016 and later became White House economic adviser, a role he relinquished earlier this year.
Cohn didn’t immediately respond to a request for comment.
The book also said that Goldman structured 1MDB debt issues to secure out-sized profits, by purchasing the bonds at a discount despite having lined up buyers for the notes. And Goldman’s internal committees that were set up to identify fraud failed to do sufficient diligence on the deals, or carry out a proper valuation of assets that 1MDB purchased, the authors claimed.
Goldman has been under scrutiny for years for its role in raising $6.5 billion for state-owned 1Malaysia Development Bhd. and for nearly $600 million in fees it earned for the bond issuance. 1MDB is at the center of a global scandal involving claims of embezzlement and money laundering, which have triggered investigations in the U.S., Singapore, Switzerland and other countries.
The New York-based bank, which has not been accused of any wrongdoing, has said it was helping 1MDB raise funds for investments that would benefit Malaysia, and couldn’t have foreseen where the money would go after that.
One potential deal with 1MDB wound its way through five Goldman committees set up to examine financial and legal risk, according to the book. Some executives also questioned the position of Low Taek Jho at the Malaysian fund, but Leissner downplayed his role. Leissner was later suspended because he used Goldman’s letterhead without authorization to write a reference letter for Low to another bank.
“We take issue with several characterizations in the book but it does corroborate that Tim Leissner deliberately hid certain activities from us and repeatedly violated our policies and procedures,” Goldman Sachs spokesman Edward Naylor in Hong Kong said in an email.
U.S. prosecutors negotiating a possible deal with Leissner are pressing for information about whether the bank turned a blind eye to the plunder of 1MDB, Bloomberg News reported in July, citing a person familiar with the matter. If they reach a plea agreement with Leissner, he would become a key witness against his superiors at the bank, said the person.
Malaysia has charged Low with money laundering and said it’s seeking Interpol’s help to locate and arrest him, tightening the net around a central figure in the scandal. Low’s whereabouts aren’t known and his spokesmen have repeatedly said he maintains his innocence and is confident he will be vindicated. They didn’t respond to an email seeking comment on allegations made in the book.
30 July 2016
US subpoenas Goldman Sachs over 1MDB Malaysia scandal
NEW YORK — US regulators have issued subpoenas to Goldman Sachs for documents showing the investment giant’s role in the 1MDB Malaysian bank merger scandal, a source close to the probe told AFP on Friday (July 29).
Subpoenas were issued a few months ago by investigators from the Department of Justice and Securities and Exchange Committee (SEC) the source said, speaking on condition of anonymity.
The investigators also want to interview a Goldman Sachs employee over the bank’s role, said The Wall Street Journal, which first broke the story.
The US officials, who base their authority on the Foreign Corrupt Practices Act, want to know why Goldman Sachs did not report transactions deemed suspicious that involve funds raised by bond offerings worth US$6.5 billion (S$8.7 billion) for 1MDB, the source said.
Goldman Sachs arranged for the bond sale, and has collected some US$590 million commissions for its work.
Goldman Sachs is collaborating with US regulators, the source said, and is also providing information to regulators in Singapore, which is also carrying out a probe, The Journal reported.
When contacted by AFP Goldman Sachs did not have any comments.
MAS examining Goldman Sach’s involvement in 1MDB bond deals
A Goldman Sachs sign at the New York Stock Exchange. Reuters file photo
SINGAPORE — Singapore’s central bank said on Saturday (July 30) it is examining the extent of Goldman Sachs’ local unit’s involvement in bond deals for Malaysian state investor 1Malaysia Development Berhad (1MDB).
“MAS supervisory examination into the extent of Goldman Sachs (Singapore)’s involvement in the 1MDB bond deals is still ongoing,” a Monetary Authority of Singapore (MAS) spokeswoman said in an email statement to Reuters.
The MAS has been questioning banks and financial institutions since last year as part of investigations into possible money laundering in the city state linked to 1MDB.
A Goldman Sachs’ spokesman in Hong Kong declined to comment on the Singapore inquiry. 1MDB has said in the past it is not a party to the civil suit, does not have any assets in the United States of America, nor has it benefited from the various transactions described in the civil suit.
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.
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.
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.