US prosecutors have issued criminal charges against two former Goldman Sachs bankers and Malaysian financier Low Taek Jho over the alleged theft of billions from the troubled 1Malaysia Development Berhad (1MDB) investment fund.
The US Attorney’s Office said Tim Leissner, 48, a former Goldman Sachs partner, had admitted conspiracy to launder money and breach the Foreign Corrupt Practices Act by paying bribes to various Malaysian and Abu Dhabi officials. He agreed to forfeit US$43.7 million.
Roger Ng, also an ex-Goldman Sachs banker, was arrested in Malaysia and was expected to be extradited to the US, the Brooklyn-based office said.
But Jho Low remains at large. Malaysia has revoked his passport and issued a warrant and an Interpol red notice.
Low denies all wrongdoing.
About US$4.5 billion disappeared from the fund, leading former prime minister Najib Razak, who set up 1MDB in 2009, being charged with numerous counts of corruption, which he has denied.
In an online chat between Low and Leissner in June 2014, they “discussed the need to ‘suck up to’ a 1MDB official and to send ‘cakes’ to a person believed to be the wife of Malaysian Official #1”, the US authorities said, in apparent reference to Najib, although he was an elected politician and not a government official, and his big-spending wife, Rosmah Mansor.
“A few months after this chat, a bank account owned and controlled by Leissner and his relative was used to transfer approximately $4.1 million to a high-end New York jeweller, in part, to pay for gold jewellery for the wife of Malaysian official #1.”
The US legal documents say Low never held a formal IMDB position but was an intermediary in numerous transactions involving Goldman Sachs and others.
US prosecutors say the three laundered the proceeds stolen from 1MDB through the US financial system, some of which was then used to pay bribes to obtain business for Goldman Sachs. Other assets were used for the personal benefit of the defendants, including purchases of luxury US properties and art.
The government of Prime Minister Mahathir Mohamed is currently seeking restitution from Goldman Sachs. Malaysia’s justice department asset-recovery initiative has already filed civil charges aimed at seizing assets allegedly bought with 1MDB funds, including a US$39-million mansion in the Los Angeles hills and a US$30-million penthouse overlooking Manhattan Central Park.
Goldman Sachs denies any wrongdoing and said it was fully cooperating with the US investigation.
The investment bank allegedly generated about US$600 million in fees for its work with 1MDB, which included three bond offerings in 2012 and 2013 that raised around US$6.5 billion.
Seized 1MDB asset, the Equanimity. Picture credit: Wikimedia