Goldman Ex-Managers Charged Over 1MDB; U.S. Says Others Knew (2)

By Bloomberg 1 November 2018
(FILE) - A file photo dated 19 January 2011 showing a sign at the Goldman Sachs both on the floor of the New York Stock Exchange after the Opening Bell in New York, New York, USA. Goldman Sachs released better than expected 1st quarter 2018 results on 17 April 2018, saying their revenues climbed to 10.04 billion USD, while net earnings stood at 2.83 billion USD. Net revenues for the first quarter were highest in three years. EPA-EFE/JUSTIN LANE

A former senior Goldman Sachs banker in Asia pleaded guilty to U.S. bribery and money laundering charges and his deputy was arrested in Malaysia, as federal prosecutors in Brooklyn laid out conspiracy allegations related to Goldman Sachs’s lucrative fundraising for Malaysian wealth fund 1MDB.

Malaysian financier Low Taek Jho, the alleged mastermind of a scheme to siphon billions of dollars from the fund, was charged in absentia. He is accused of conspiring with Roger Ng, then a Goldman Sachs banker, to launder billions of dollars embezzled from 1MDB, known formally as 1Malaysia Development Bhd.

Former senior Goldman Sachs banker Tim Leissner pleaded guilty to conspiring to launder money and violating the Foreign Corrupt Practices Act by paying bribes to Malaysia and Abu Dhabi officials and circumventing Goldman’s internal accounting controls, according to prosecutors. He’s been ordered to forfeit $43.7 million.

Low, Ng and Leissner are the first individuals to be charged in the U.S. in relation to the scandal at 1MDB. Goldman Sachs arranged bond offerings that helped the fund raise more than $6 billion, much of which, according to international authorities, was squirreled away in private accounts and used to buy yachts, paintings and high-end real estate.

Prosecutors alleged bribes and kickbacks were paid in connecting with Goldman’s bond offerings on 1MDB’s behalf, which generated some $600 million in fees for the bank. Such payments were “known to Ng, Leissner and other employees” of the bank, according to prosecutors. Prosecutors say that one of the people who knew about the payments was an Italian national working for the bank in Asia — a description that matches that of Andrea Vella, who the bank recently placed on leave.

Leissner admitted in his plea that he bribed officials in two countries — Malaysia and the United Arab Emirates — to get bond deals for Goldman Sachs. He admitted that he and others arranged the 1MDB fundraising as bond offerings, because it would generate higher fees for the bank than other fundraising. Leissner admitted to enriching himself far beyond what has been known, saying that more than $200 million in proceeds from 1MDB bonds flowed into accounts controlled by him and a relative.

Read more: Goldman Sachs and 1MDB: What We Learned From First U.S. Charges

Low, known as Jho Low, remains at large, prosecutors said in a statement. Ng, known as Roger Ng, was arrested earlier Thursday in Malaysia, pursuant to a provisional arrest warrant issued at the request of the U.S., they said. Ng is expected to appear in a Malaysian court on Friday, according to a person with knowledge of the matter.

“Mr. Low maintains his innocence,” a spokesman, Isaac Benjamin, said through Low’s legal team. Benjamin said that Low held no formal position at 1MDB and wasn’t employed by Goldman Sachs or the governments of Malaysia or Abu Dhabi.

“Mr. Low is presumed innocent unless and until proven guilty,” Benjamin said. “Mr. Low simply asks that the public keep an open mind regarding this case until all of the evidence comes to light, which he believes will vindicate him.”

Michael DuVally, a Goldman Sachs spokesman, declined to comment. Goldman declined to comment on Vella’s behalf, and a call to Vella wasn’t immediately returned.

The U.S. alleges that a small coterie of Malaysians led by Low diverted money from 1MDB into personal accounts disguised to look like legitimate businesses, and kicked back some of those funds to officials. Some of the money is alleged to have ended up with former Prime Minister Najib Razak and his family.

How Malaysia’s 1MDB Scandal Shook the Financial World: QuickTake

According to court papers, Leissner’s scheme dates back to at least 2009, prosecutors said. Between 2012 and 2013, he conspired with two others to get and retain business from 1MDB for the benefit of Goldman Sachs by promising bribes and kickbacks to government officials in Malaysia and Abu Dhabi using misappropriated and embezzled proceeds from 1MDB bond transactions. DM


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