Archive for November, 2018

28
Nov
18

Police begins probe on 1MDB audit ‘tampering’ claim

CCID begins probe on 1MDB audit ‘tampering’ claim

The Commercial Crime Investigation Department has initiated investigations on allegations that the auditor-general’s report on 1MDB was “tampered”.

In a statement today, CCID head Amar Singh said the police are looking into allegations of “framing incorrect records”, forgery with intent to cheat and forgery involving public servants.

On Sunday, auditor-general Madinah Mohamad released a statement claiming that former prime minister Najib Abdul Razak and several key civil servants were involved in the tampering of the document.

Madinah had detailed how her predecessor Ambrin Buang, then-chief secretary to the government Ali Hamsa, then-1MDB president Arul Kanda and Najib’s former private secretary Shukry Mohd Salleh were involved in the alleged plot.

Attempts to reach these four individuals for comments have been unsuccessful.

Najib did not address the “tampering” claims but instead addressed Madinah’s allegation that paragraphs relating to Jho Low were removed from the audit report.

Shafee & Co, the law firm acting for Najib, accused the cabinet of compelling Madinah to release the statement for political reasons.

It said Madinah’s statement also gave the impression that there was a cover-up attempt involving 1MDB and will influence Najib’s upcoming graft trials.

“This can only be interpreted as an attempt to influence public opinion and to prejudice our client before the trial which could amount to contempt of court as there are elements of attempt to prejudice our clients intended defences,” it added.

Apart from the police, the MACC had also commenced investigations on the same allegations.

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CCID begins probe on 1MDB audit ‘tampering’ claim
26 Nov 2018 – Malaysiakini

25
Nov
18

Auditor-general: Najib ordered tampering of 1MDB audit

Auditor-general: Najib ordered tampering of 1MDB audit

Auditor-general Madinah Mohamad has confirmed that former prime minister Najib Abdul Razak and others had tampered with the National Audit Department’s 1MDB report.

This included an order from Najib’s private secretary to delete a paragraph mentioning the presence of controversial financier Low Taek Jho, who is currently on the run from authorities.

Citing a chronology prepped by the Audit Department’s 1MDB team, Madinah alleged that her predecessor, Ambrin Buang, and then-chief secretary to the government Ali Hamsa had been summoned to a meeting with Najib on Feb 22, 2016.

“The former prime minister had ordered the deletions of paragraphs that contained two versions of the 2014 1MDB financial statements, and called for a probe by the authorities,” she said in her statement.

The next day, the 1MDB audit team was informed that the government had categorised the audit report as a “crisis.”

Subsequently, on Feb 24, 2016 another meeting was held attended by Ali, Ambrin, and then-1MDB president Arul Kanda Kandasamy, along with representatives from the Finance Ministry and the Attorney-General’s Chambers, to discuss the 1MDB audit report.

“As a result of these discussions, several more paragraphs in the report were ordered to be expunged and revised,” she said.

Further deletions and revisions were also ordered on Feb 25 after the audit team was ordered by Ali to meet with Arul Kanda.

‘Mentions of Low expunged’

A day later, on Feb 26, Najib’s former private secretary Shukry Mohd Salleh then ordered a former audit director to expunge mentions of Low attending a 1MDB board of directors meeting, “on the excuse that it is sensitive, and to avoid facts from being twisted by the opposition.”

The audit report was then sent to Ali on Feb 29, after which he ordered the audit team to come to his office on March 1.

On that day, the audit team met with Arul Kanda, who reviewed their audit report and asked for further deletions and revisions.

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Auditor-general: Najib ordered tampering of 1MDB audit
25 Nov 2018 – Malaysiakini

23
Nov
18

Scorpene submarine deal resurfaces

Submarine deal resurfaces: Najib quizzed, Razak Baginda may be next

EXCLUSIVE | MACC has re-opened its investigations into the purchase of two Scorpene-class submarines when former premier Najib Abdul Razak was the defence minister.

Sources told Malaysiakini this was the reason Najib was summoned to the MACC headquarters in Putrajaya this morning.

“The case has been reopened,” said a high-ranking MACC officer, who declined to be named.

Sources said investigators working on the case, in which kickbacks were allegedly paid for the 2002 purchase of the submarines from France, might also call in others to facilitate the probe.

This, according to one of the sources, includes Najib’s former close associate Abdul Razak Baginda.

The submarines, which were purchased to beef up the navy’s fleet, had been named KD Tunku Abdul Rahman and KD Tun Razak.

The former arrived in Malaysia in September 2009, followed by the latter in July 2010.

Media reports stated that Najib arrived at the MACC headquarters about 9.30am to facilitate investigation over an unspecified case.

Mongolian national Altantuya Shaaribuu, who was murdered by two former elite police personnel, was also implicated in the deal.

However, documents which surfaced in 2013, including a contract signed on June 5, 2002, between the Malaysian government and French supplier DCN International, Spanish supplier Izar Construcciones Navales, and Malaysian service provider Perimekar Sdn Bhd had debunked this.

Razak Baginda, who confessed to having an affair with her, was acquitted of abetting the crime.

Najib has repeatedly denied having any links with the case.

In May 2018, former Federal Court judge Gopal Sri Ram urged the authorities to reopen the probe into the Scorpene deal.

He said it is necessary to relook into the purported kickbacks in the case owing to the other related allegations.

“This includes the handing over of suitcases of cash, coupled with a spending spree in Paris, as well as the dastardly murder of Altantuya.

“One may well ask why former attorney-general Abdul Gani Patail did not secure the arrest and detention of two police officers pending the public prosecutor’s appeal to the Federal Court,” he added.

Consultancy services

Former police special operations personnel chief inspector Azilah Hadri and corporal Sirul Azhar Umar were found guilty of murdering Altantuya in January 2015 and sentenced to death.

However, Sirul (photo) had fled to Australia when the pair was acquitted prior to the Federal Court overturning the decision.

In January 2016, it was reported that a former boss of an international subsidiary of Thales, the French company alleged to have paid the commissions to Najib and the Malaysian official, was indicted in a French court over the deal.

According to AFP, Bernard Baiocco, 72, former president of Thales International Asia (Thint Asia), was indicted on Dec 15, 2015 for “active bribery of foreign public officials linked to Najib Razak.”

The report named Razak Baginda, who is a former political analyst, as the person who allegedly received the kickbacks.

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Submarine deal resurfaces: Najib quizzed, Razak Baginda may be next
Hariz Mohd
19 Nov 2018 – Malaysiakini

17
Nov
18

Tengku Adnan charged with corruptly receiving RM3 million from developers

Ku Nan’s RM3m corruption charges: Ties to KL land, property developers

KUALA LUMPUR, Nov 15 — Datuk Seri Tengku Adnan Tengku Mansor was today charged with corruptly receiving a total of RM3 million from property developers during his time in power, with his case also linked to a project in Kuala Lumpur.

Tengku Adnan was federal territories minister from May 2013 to May 2018 under the then-Barisan Nasional (BN) administration, a position which saw him overseeing the federal territories of Kuala Lumpur, Putrajaya and Labuan.

Tengku Adnan, 68, today pleaded not guilty to allegedly corruptly receiving cheques for a total of RM3 million in funds in December 2013 and June 2016 from property developers.

Tengku Adnan’s charges

Under the first charge, Tengku Adnan was charged with receiving a bribe of RM1 million from property developer Datuk Tan Eng Boon in the form of a Public Bank cheque owned by Pekan Nenas Industries Sdn Bhd that was deposited into Tengku Adnan’s bank account in CIMB.

According to the charge, the alleged bribe was intended as a “reward” for Tengku Adnan’s approval of the application of Nucleus Properties Sdn Bhd (now known as Paragon City Development Sdn Bhd) for the increase of the plot ratio for a development on Jalan Semarak in Kuala Lumpur.

The plot ratio for a property project determines its density or how much floor area a developer can build on a plot of land, which is typically key to maximising the use or profit obtainable from a land.

According to the charge, Tengku Adnan was accused of committing the offence on December 27, 2013 at the CIMB Bank branch at the Putra World Trade Centre (PWTC) in Kuala Lumpur.

The first charge is under Section 16(a)(A) of the Malaysian Anti-Corruption Commission Act 2009, which is punishable by a maximum jail term of 20 years and a fine of RM10,000 or not less than five times the bribe’s value, whichever is higher.

Tengku Adnan was also charged with an alternative charge to the first charge, over the same transaction involving the same RM1 million cheque, but with the offence specifically due to his position as a civil servant then.

Under the alternative charge to the first charge, Tengku Adnan was accused of accepting for himself — as a public servant in his capacity as federal territories minister — the same RM1 million cheque from Tan.

According to the alternative charge, Tengku Adnan was alleged to have accepted the RM1 million cheque while knowing that Tan as a director in Nucleus Properties had a connection to his official function.

This alternative charge, said to have occurred at the same place and time, was brought under Section 165 of the Penal Code, which is punishable by jail of up to two years or fine or both.

Under the second charge, Tengku Adnan was alleged to have on June 14, 2016 accepted for himself — as a public servant in his role as federal territories minister — a Hong Leong Islamic Bank cheque of RM2 million owned by property developer Aset Kayamas Sdn Bhd from Chai Kin Kong, with the cheque deposited through Tadmansori Holding Sdn Bhd’s CIMB account.

According to the second charge, Tengku Adnan was accused of accepting the cheque while knowing that Aset Kayamas had a connection with his official function.

This charge against Tengku Adnan over the alleged corrupt receipt of RM2 million as a public servant was also brought under Section 165 of the Penal Code, which is punishable by jail of up to two years or fine or both.

Tengku Adnan, who is currently Putrajaya MP and Umno treasurer, today was granted bail of RM1 million after he claimed trial to these charges.

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Ku Nan’s RM3m corruption charges: Ties to KL land, property developers
16 November 2018 – MMO

16
Nov
18

Rosmah and Rizal charged for a RM1.25 billion solar hybrid project for rural schools

Rosmah and Rizal’s charges: Allegedly seeking RM212m in bribes for a RM1.25b project

KUALA LUMPUR, Nov 15 — Datin Seri Rosmah Mansor and her former aide Datuk Rizal Mansor were today charged with asking for bribes from a company to the tune of about one-sixth of a government contract’s value, just for helping the company win the RM1.25 billion project.

The wife of former prime minister Datuk Seri Najib Razak and her aide were charged separately in two different Sessions Court courtrooms today here, in relation to their alleged role in helping to make sure Jepak Holdings Sdn Bhd received the project directly from the Education Ministry without going through open tender.

All in all, the six charges alleged that Jepak Holdings was asked to fork out a total of RM212.5 million just to secure the project, which comes up to 17 per cent or about one-sixth of the project’s RM1.25 billion value.

The project was for the supply of solar panel hybrid power systems and the maintenance and operation of electricity generators to 369 rural schools in Sarawak.

Based on the six charges, Jepak Holdings’ managing director Saidi Abang Samsudin allegedly eventually paid a total of RM7 million to Rosmah and Rizal for their roles in getting the RM1.25 billion project.

All in all, the bulk, or RM6.5 million of the bribes, was said to have been given with Rosmah as the intended recipient, while Rizal allegedly took RM500,000 for himself.

Rosmah’s two charges

Rosmah, 67, was charged with asking Jepak Holdings’ managing director Saidi Abang Samsudin to give her RM187.5 million, or 15 per cent of the contract’s value, as an inducement for her assistance to the company in getting the project through direct negotiations from the Education Ministry.

This allegedly took place between March and April 2016 in an eatery at Sunway Putra Mall in Kuala Lumpur.

Rosmah was also charged with receiving RM1.5 million in bribes from Saidi at her residence on Jalan Langgak Duta on September 7, 2017, as a reward for her aid in helping the latter’s firm get the project.

Rosmah, who is the wife of former prime minister Datuk Seri Najib Razak, stays with Najib at the latter’s private residence on Jalan Langgak Duta, Taman Duta.

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Rosmah and Rizal’s charges: Allegedly seeking RM212m in bribes for a RM1.25b project
15 November 2018 – MMO

10
Nov
18

Concealing 1MDB scheme was in line with Goldman’s culture, says ex-banker

Concealing 1MDB scheme was in line with Goldman’s culture, says ex-banker

MANHATTAN: Goldman Sachs’s former top banker in Asia says the culture of secrecy at the investment bank led him to conceal wrongdoing from the company’s compliance staff.

Now, Tim Leissner is in a position to help prosecutors peel back the curtain.

In his guilty plea, which was unsealed yesterday, Leissner said others at the bank helped him conceal bribes used to retain business in Malaysia, suggesting he has more to offer prosecutors.

The heavily redacted transcript doesn’t indicate whether he is cooperating with authorities. But the judge warned him that under federal sentencing guidelines he faces decades in prison. Providing useful information to prosecutors might help Leissner get a more lenient sentence.

Leissner’s Aug 28 statement to the judge may give prosecutors more leverage to go after the bank, and other executives, for their roles in raising US$6.5 billion for 1MDB. Prosecutors say more than US$4 billion was siphoned off by friends and family of the nation’s prime minister, among others.

“I conspired with other employees and agents of Goldman Sachs very much in line with the culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs,” Leissner said.

Michael DuVally, a spokesman for Goldman, didn’t have an immediate comment. The bank has said it believed proceeds of debt sales it underwrote were for development projects and that Leissner withheld information from the firm.

Jho Low

In his plea, Leissner acknowledged lying to compliance officials at Goldman about the role in the fund played by Low Taek Jho, better known as Jho Low, the alleged mastermind of the fraud.

“I knew that concealing Jho Low’s involvement as an intermediary was contrary to Goldman Sachs’ stated internal policies and procedures,” he said.

“I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs, for the benefit of Goldman Sachs and myself.”

Goldman has been under scrutiny for years over its role in raising money for 1MDB and for the fees it earned – about US$600 million. 1MDB is at the centre of a global scandal involving claims of embezzlement and money laundering, which have triggered investigations in the US, Singapore, Switzerland and beyond and helped drive former prime minister Najib Razak from power.

Blankfein said to have attended 1MDB meeting

In 2015, after the scandal spilled into public, Goldman began investigating Leissner and eventually suspended him. He left the following year. Goldman’s lawyers scoured Leissner’s record and provided evidence to prosecutors that he deceived them, not only in lying about his management of the Malaysian fundraising, but in other unrelated matters, people familiar with the matter have said.

Charges against Leissner, Low and Goldman banker Roger Ng were unsealed in the US this month. Leissner had secretly pleaded guilty to conspiring to launder money and violating the Foreign Corrupt Practices Act at the August hearing. He’s free on US$20 million bail.

Leissner told the judge he took part in the money laundering, bribery and kickbacks from 2009 to 2014 in an effort to acquire and execute the “strategic” 1MDB transaction to benefit himself and Goldman. He said the goal was to influence Malaysian officials so that Goldman would get 1MDB’s business.

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Concealing 1MDB scheme was in line with Goldman’s culture, says ex-banker
Bloomberg
November 10, 2018 – FMT

09
Nov
18

As 1MDB noose tightens, Umno in desperate bid to wash hands of scandal

As 1MDB noose tightens, Umno in desperate bid to wash hands of scandal

KUALA LUMPUR, Nov 3 — Umno deputy president Datuk Seri Mohamad Hasan tried to distance his party today from the growing 1MDB corruption scandal as the matter escalated from a civil suit to full-blown criminal indictments in the US.

He said that while he sympathised with former president Datuk Seri Najib Razak, who is already facing charges here over the scandal, Umno must not be dragged further into the matter that is under investigation in six international jurisdictions.

“Umno is an innocent party and absolutely not party to any operations or transactions of 1MDB.

“It is unfair, undeserved and unreasonable for any party to keep blaming and linking Umno to matters that it did not know of or do,” he said in a statement.

The US Justice Department (DoJ) announced this week that it has indicted former Goldman Sachs bankers Tim Leissner and Roger Ng, and alleged 1MDB mastermind Low Taek Jho on criminal charges.

This is a marked escalation of the DoJ’s previous kleptocracy action over 1MDB. Previously, the culprits had claimed that the scandal was not criminal in nature.

Leissner pleaded guilty in a plea deal while Ng was arrested here and will be deported to the US to face charges there. Low remains at large.

The indictments will be of particular concern to Najib and his family, as they are strongly alluded to as “Malaysian Official 1”, MO1’s wife, and MO1’s “relative” who co-founded a movie production firm in the US, as being involved in the alleged corruption or as co-conspirators.

Low, also known as Jho Low, changed his position on the matter as well, simply insisting now that he was innocent until proven guilty when his previous statements used to detail how there had not been any criminal proceedings against him in any jurisdictions.

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As 1MDB noose tightens, Umno in desperate bid to wash hands of scandal
3 November 2018 – MMO

08
Nov
18

Unmasking Low and Leissner’s co-conspirators in 1MDB scandal

KiniGuide: Unmasking Low and Leissner’s co-conspirators

KINIGUIDE | Two years after the US Department of Justice (DOJ) filed civil forfeiture suits to recover assets and properties linked to the 1MDB scandal, the first criminal charges were finally made on Thursday.

As per its usual practice, the DOJ anonymised the names of individuals and entities who are not essential to the particular charge being brought against an accused.

By studying the history of the 1MDB scandal and comparing it against allegations made in the charge sheet, it is nevertheless possible to identify the anonymous individuals and entities.

Here is a quick rundown of who they might be:

Low Taek Jho, Ng Chong Hwa, and Tim Leissner

The financiers – Jho Low, Roger Ng, and Tim Leissner – are referred as anonymous co-conspirators in each other’s charge sheets.

In the Low & Ng charge sheet, Leissner is referred as “Co-Conspirator #1”. In the Leissner charge sheet, Low is referred as “Co-Conspirator #1” while Ng is referred as “Co-Conspirator #2”.

This can be established by simply comparing how the trio are described in the two charge sheets.

The trio is alleged to have used Low’s relationships to obtain and retain business for a US financial institution (likely to be Leissner’s former employer Goldman Sachs Group Inc) through the promise and payment of hundreds of millions of dollars in bribes.

This includes ensuring that 1MDB awards Goldman Sachs with a role in its bond issuances.

Leissner has pleaded guilty, while Ng had been arrested in Malaysia and would be extradited to the US to face charges. Low is still at large and claimed that he is innocent.

The DOJ has reminded that the charges against Ng and Low are allegations, and they are presumed innocent until and unless they are proven guilty.

Najib Abdul Razak

The infamous codename “Malaysian Official #1” appears again in the charge sheets, and once again, it is likely to refer to former prime minister Najib Abdul Razak.

In the two charge sheets, “Malaysian Official #1” is described as “a Malaysian national and high-ranking official in the Malaysian government and the Ministry of Finance from in or around at least 2009 until in or around 2018 with high-level authority to approve 1MDB business decisions.”

The time period coincides with Najib’s rise and fall as prime minister, during which he also held the finance portfolio. Najib (photo) was also the 1MDB advisory board’s chairperson until its dissolution.

The charge sheet against Leissner claims that he and other co-conspirators had facilitated the siphoning of 1MDB funds raised through a 2012 bond issuance codenamed “Project Maximus” while knowing that Malaysian Official #1 would receive kickbacks from it.

Some US$1.3 million allegedly siphoned from another bond issuance purportedly went to a New York jeweller to pay for jewellery for “the wife of Malaysian Official #1”

Previously, it was alleged that Najib received US$681 million, which had been transferred to his personal bank account, of which US$620 million was returned.

Najib had maintained innocence, but the DOJ had previously alleged in its civil forfeiture suits that the returned funds were used by Low’s associate Eric Tan to buy several artworks, plus a 22-carat pink diamond pendant and necklace for “the wife of Malaysian Official #1”.

Riza Aziz

The Co-Conspirator #3 described in the Low & Ng charge sheet is described as “a Malaysian national who was a close relative of Malaysian Official #1 and owned US Motion Picture Company #1, a US legal entity in the business of film production.”

This is likely to refer to Najib’s stepson Riza Aziz (photo) and his film production company Red Granite Pictures.

Previously, the DOJ alleged in its civil forfeiture suit that Red Granite Pictures had used funds originating from 1MDB to finance movies, ‘The Wolf of Wall Street’, ‘Daddy’s Home’, and ‘Dumb and Dumber To’.

The fact that US Motion Picture Company #1 was involved in the production of ‘The Wolf of Wall Street’ was also mentioned in the Low & Ng charge sheet.

Red Granite Picture has since settled the suit by paying US$60 million with no admission of guilt, while Riza was only allowed to draw a limited salary to pay for his health insurance until the settlement was fully paid on Sept 20.

According to the charge sheet against Low & Ng, about US$133 million of 1MDB’s first bond issuance (Project Magnolia) ended up in an account controlled by Co-Conspirator #3.

…more
KiniGuide: Unmasking Low and Leissner’s co-conspirators
KiniGuide
3 Nov 2018 – Malaysiakini

07
Nov
18

US indictment on 1MDB financer Jho Low, Goldman Sachs bankers explained

US indictment on 1MDB financer Jho Low, Goldman Sachs bankers explained

JHO Low, the Malaysian financer at the centre of the country’s corruption scandal, and two other high-flying Goldman Sachs bankers were slapped with formal charges in the US on Thursday for embezzling billions from the 1Malaysia Development Berhad (1MDB) state fund.

The US Justice Department alleges a total of US$4.5 billion was laundered from 1MDB in a scandal that rocked the Southeast Asian nation and which was a key factor in former Prime Minister Najib Razak’s removal from office earlier this year.

The 36-year-old Low, whose real name is Low Taek Jho, was indicted in the federal court in the Eastern District of New York on Thursday, the same day the department arrested former Goldman Sachs banker, Ng Chong Hwa (Roger Ng), was arrested in Malaysia.

The department also unsealed charges against Tim Leissner, another ex-Goldman banker who earlier pleaded guilty and agreed to pay US$43.7 million in restitution of ill-gotten gains.

The two bankers were charged with conspiracy to commit bribery and conspiracy to commit money laundering. The charges are the first in the US in the case which had prompted investigations in at least six countries.

The scandal has raised fresh questions about corporate culture at the prestigious investment bank. Here are some of the key takeaways from the case based on the full statement released by the DOJ:

Bribes and conspiracy

Apart from charges on conspiring to launder billions of dollars embezzled from 1MDB, Ng is accused of conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying millions bribes to various Malaysian and Abu Dhabi officials.

As part of the three-count indictment, the department said Ng is also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a major New York-headquartered financial institution, which underwrote more than US$6 billion in bonds issued by 1MDB in three separate bond offerings in 2012 and 2013, while he was working at Goldman as a managing director.

The DOJ said Low remains at large.

Created to pursue investment and development projects for Malaysia’s economic benefit, 1MDB is a Malaysian state-owned and controlled fund. But the department pointed out that billions of dollars was misappropriated and “fraudulently diverted from 1MDB” between 2009 and 2014. This included funds raised by 1MDB in 2012 and 2013 through three bond transactions executed with Goldman.

As part of the scheme, the department said Low, Ng, Leissner, and others conspired to bribe government officials in Malaysia, including at 1MDB, and Abu Dhabi to obtain and retain lucrative business.

“They also allegedly conspired to launder the proceeds of their criminal conduct through the US financial system by purchasing, among other things, luxury residential real estate in New York City and elsewhere, and artwork from a New York-based auction house, and by funding major Hollywood films.”

Malaysian official #1

The department said Low’s close relationships with high-ranking government officials in Malaysia and Abu Dhabi were central to the scheme, including his relationship with a high-ranking Malaysian government official who had authority to approve 1MDB business decisions, named by the DOJ as ‘Malaysian Official #1’, or MO1.

Between 2009 and 2014, Leissner and Ng reportedly leveraged on Low’s closeness with the officials through the promise and payment of hundreds of millions of dollars in bribes.

The bribes led to three bond transactions known to Goldman sas “Project Magnolia,” “Project Maximus,” and “Project Catalyse”, all of which generated approximately US$600 million in fees and revenues along with increased reputational prestige for Goldman.

At the same time, Ng, Leissner and others allegedly received large bonuses and enhanced their own reputations at Goldman, the department said. In total, more than US$2.7 billion was misappropriated from 1MDB.

…more
US indictment on 1MDB financer Jho Low, Goldman Sachs bankers explained
By A. Azim Idris
2nd November 2018 – Asian Correspondent

02
Nov
18

Justice Department Charges Ex-Goldman Bankers in Malaysia 1MDB Scandal – WSJ

Justice Department Charges Ex-Goldman Bankers in Malaysia 1MDB Scandal

Charges name former Goldman bankers Tim Leissner and Roger Ng, as well as Malaysian financier Jho Low

Two senior Goldman Sachs bankers paid bribes and stole and laundered money from a Malaysian sovereign-wealth fund, U.S. prosecutors allege, putting the bank at the center of one of the biggest financial frauds in history.

Former Goldman partner Timothy Leissner, then its head of Southeast Asia, pleaded guilty to conspiring to launder money and violate foreign antibribery laws for helping siphon off billions of dollars from the fund, known as 1Malaysia Development Bhd, or 1MDB, according to filings unsealed Thursday.

Former Goldman managing director Roger Ng, and the alleged mastermind of the fraud, Malaysian financier Jho Low, were indicted on three counts of conspiring to violate foreign antibribery laws and launder money.

For Goldman, the charges—as well as a continuing investigation into the bank’s own conduct—come at an inflection point. Executives have spent years shining up a reputation sullied by the 2008 crisis and refashioning the elite firm as a Main Street bank.

Goldman underwrote about $6.5 billion in bonds for 1MDB. The indictment alleges the bankers bribed government officials to get the bond deals, controlled offshore accounts where the stolen money was funneled and helped launder the proceeds.

Goldman was paid $600 million in fees from 1MDB for the deals, making the investment fund one of Goldman’s most profitable clients in the world in those years. Senior officials including former Chief Executive Lloyd Blankfein and President Gary Cohn had previously praised the bankers for their work.

A second Goldman partner is cited as an unnamed co-conspirator by prosecutors, who allege he knew bribes were being paid and helped Mr. Leissner get around Goldman’s internal compliance officials. The charging documents refer to an “Italian national.” People familiar with the matter confirmed his identity as Andrea Vella.

Mr. Vella was placed on leave Thursday, according to a person familiar with the matter, two weeks after he was stripped of his management responsibilities as co-head of Goldman’s investment banking division in Asia.

An attorney for Mr. Leissner declined to comment. Mr. Ng couldn’t be reached. Goldman declined to make Mr. Vella available. A spokesman for Mr. Low said he maintains his innocence.

The Justice Department cases describe a cowboy atmosphere in Goldman’s Asian operations, where bankers were “highly focused on consummating deals, at times prioritizing this goal ahead of the proper operation of its compliance functions.”

The indictments, the first criminal charges in the U.S. in the 1MDB scandal, come as prosecutors negotiate with Goldman over the bank’s own culpability, according to people familiar with the matter. “The firm continues to cooperate with all authorities investigating this matter,” a Goldman spokesman said.

In recent discussions, Goldman has blamed rogue employees and pushed to avoid criminal liability, the people said.

The bankers repeatedly hid their dealings with Mr. Low from Goldman’s compliance officers, who had raised concerns about the source of the baby-faced Malaysian’s mysterious wealth.

The Leissner guilty plea is the biggest black eye for a Goldman partner since 1989, when executive Robert Freeman was led off the trading floor in handcuffs, later convicted of a crime related to insider trading.

Bankers linked to the scandal were among Goldman’s most senior executives in Asia, and the 1MDB bond deals were blessed by senior managers in New York. Messrs. Leissner and Vella are among Goldman’s 435 partners, a rank bestowed on about 1% of employees.

Mr. Leissner is cooperating with investigators, according to a person familiar with the matter, and details included in Thursday’s indictments suggest he has provided evidence against others. Mr. Leissner, 48 years old, will forfeit $43.7 million and is scheduled to be sentenced in January.

Mr. Ng, 51, was arrested in Malaysia, while Mr. Low, 36, is at large and was last seen in China, according to Malaysian authorities.

Goldman underwrote three bond sales for 1MDB, code-named Projects Magnolia, Maximus and Catalyze, according to the indictment. More than $2.7 billion of the approximately $6.5 billion raised was diverted into accounts controlled by Messrs. Low, Leissner and others, according to prosecutors.

Money from those accounts was used to pay bribes to government officials, pad a slush fund controlled by Malaysia’s prime minister Najib Razak, and purchase jewelry for his wife Rosmah Mansor, court documents show. More than $200 million alone went to Mr. Leissner and another alleged co-conspirator. A relative of Mr. Ng received $24 million from a shell company funded with stolen 1MDB money, prosecutors say.

…more
Justice Department Charges Ex-Goldman Bankers in Malaysia 1MDB Scandal
By Nicole Hong,
Liz Hoffman and
Bradley Hope
Nov. 1, 2018 – WSJ





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All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?

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