Published: Fri, November 02, 2018
Global | By Enrique Rogers

United States charges financier, former Goldman bankers for 1MDB

United States charges financier, former Goldman bankers for 1MDB

The charges against the former Goldman bankers, Tim Leissner and Roger Ng, were announced by federal prosecutors in Brooklyn.

Leissner pleaded guilty to conspiring to launder money and to violate the Foreign Corrupt Practices Act.

While US prosecutors have previously filed civil asset forfeiture suits for assets allegedly bought with some of the stolen funds, these are the first criminal charges the Justice Department has brought against individuals in the case.

Goldman Sachs arranged bond offerings that helped the fund raise over US$6 billion, much of which, according to the global authorities, was squirrelled away in private accounts and used to buy yachts, paintings and high-end real estate. The banker, Andrea Vella, was put on leave in October, according to a person familiar with the matter.

The government of former Malaysian Prime Minister Najib Razak set up 1Malaysia Development Berhad, or 1MDB, in 2009.

The money was supposed to support development projects, but prosecutors say the three men "conspired to launder" more than $2.7bn through the United States financial system, and used this money to pay bribes and "for the personal benefit of themselves and their relatives". Ng was arrested earlier yesterday in Malaysia, pursuant to a provisional arrest warrant issued at the request of the United States, they said.

USA prosecutors previously filed civil asset forfeiture suits for assets allegedly bought with some of the stolen funds.

Some of those allegations were described in civil forfeiture complaints filed by federal prosecutors in Los Angeles past year.

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The Malaysian government is now seeking restitution from Goldman.

An attorney for Najib, Shafee Abdullah, dismissed the latest charges as "foolish".

Ng was also indicted for conspiring to violate the internal controls at Goldman Sachs, which underwrote about US$6.5 billion in bonds issued by 1MDB, the USA government said. The authorities have examined what role, if any, the firm played in the 1MDB fraud, whether it knew about the alleged fraud and whether it should have done more to uncover the misappropriation of funds.

Goldman did not immediately have a comment Thursday. It has seized 240 million Singapore dollars ($180 million) of property and cash and says about half of that belonged to Low and his immediate family.

Mr. Leissner, who worked closely with the Malaysian fund, had been in plea talks with federal prosecutor for some time.

Mr Ng was a managing director at Goldman until his departure in May 2014. The BBC has not yet been able to contact a lawyer representing him.

The transactions were structured as bond deals "rather than other forms of financing, because doing so generated much higher revenues and fees for (Goldman Sachs), improved the bank's reputational standing in both the Southeast Asian region and globally and provided Leissner and other bankers with increased remuneration and professional prestige, even though the bond financing was more expensive for 1MDB", the DOJ said in the criminal information document.

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