Post by anenro on Dec 20, 2019 14:13:22 GMT 4
Goldman Is in Talks to Settle Malaysia Fund Scandal
Goldman Sachs is negotiating with federal prosecutors to pay a fine of as much as $2 billion, and have a subsidiary plead guilty to settle claims about its role in a scheme to loot billions from a sovereign wealth fund in Malaysia, according to two people with knowledge of the matter.
The case stems from a scheme to siphon off more than $2.7 billion of the $6.5 billion raised for the 1Malaysia Development Berhad, known as 1MDB. Federal authorities have that said Jho Low, a flamboyant Malaysian financier, was the principal architect of the plot to bribe public officials that has led to the guilty plea of a former Goldman partner and criminal charges against another of the bank’s executives.
The investigation is focused on violations of money laundering and foreign bribery laws. The settlement could include a guilty plea from Goldman’s subsidiary in Asia, the people said, asking not to be identified because the talks were continuing. The bank may agree to include an outside monitor to review its compliance procedures, a provision that has become common when banks resolve criminal investigations.
A separate fine paid to the government of Malaysia and other regulatory agencies could raise the total financial penalty to more than $2 billion, according to three people familiar with the talks. It’s possible the settlement could be completed by the end of January.
The bank has said it was cooperating with the investigation. Andrew Williams, a bank spokesman, said resolution discussions were continuing, “And it is irresponsible to speculate on an outcome.” A spokesman for federal prosecutors in Brooklyn who are overseeing the investigation declined to comment.
The Wall Street Journal reported the potential guilty plea earlier Thursday.
The bank could instead reach a deferred prosecution agreement, an arrangement in which prosecutors drop all charges if the bank complies with a number of provisions.
Last year, a former Goldman partner, Tim Leissner, pleaded guilty to helping orchestrate the fraud, which involved the sale of bonds to raise money for 1MDB. The bank has said that Mr. Leissner had acted on his own, but that it could have to pay significant penalties to resolve the matter.
On Monday, Mr. Leissner was barred by securities regulators from working in the banking industry. The settlement said unnamed “senior executives” at the bank knew Mr. Leissner did not tell the truth during an Oct. 10, 2012 meeting, when he was asked whether Mr. Low, whom Goldman’s compliance department had declined several times to approve as a client, had any involvement in the bond deals. Prosecutors in charging documents have tended to avoid using the phrase “senior executives” to refer to others at Goldman who may have known about the bribery scheme.
Mr. Low, who was also charged by federal prosecutors and Malaysian authorities, is believed to be living in China and has not made an appearance in court to respond to the charges.
The 1MDB bond deals were a significant source of revenue for Goldman in Asia, at a time that Wall Street was beginning to rebound from the depths of the financial crisis. The bank raked in nearly $600 million in fees for underwriting three bond deals for 1MDB in 2012 and 2013, which the bank had secured without fending off any rival bids.
The money raised by the fund was supposed to finance infrastructure and other development projects to benefit the Malaysian public. But instead, it went to pay bribes to Malaysian officials and fuel the lavish lifestyle of Mr. Low and others, federal authorities have charged.
The billions looted from the fund financed an enormous spending spree that included the purchases of diamonds, Birkin bags, paintings by Picasso and Monet, and financing for the Hollywood film “The Wolf of Wall Street.” In October, Mr. Low agreed to give up as much as $900 million in assets he had procured from the scheme.
The scandal ultimately toppled the government of Malaysia’s former prime minister, Najib Razak, who is now on trial in Malaysia for charges related to the fraud. Malaysian authorities also have charged Goldman and 17 current and former bank executives with wrongdoing.
The 1MDB investigation has dogged Goldman for at least three years, but it became a major crisis for the bank last year when federal prosecutors disclosed that Mr. Leissner had pleaded guilty to foreign bribery and money laundering charges.
Mr. Leissner, who is married to the fashion designer and model Kimora Lee Simmons, agreed to forfeit more than $43 million he had received as part of the scheme. He has been free on bail while he awaits sentencing and has cooperated with the investigation.
Federal prosecutors also charged Roger Ng, an associate of Mr. Leissner, who is set to go on trial in the spring.
The indictment naming Mr. Ng and Mr. Low suggested that an Asian-based Goldman banker, Andrea Vella, also may have known some parts of the scheme, although Mr. Vella has not to be charged with any wrongdoing. A lawyer for Mr. Vella did not respond to messages seeking comment.
Goldman Sachs is negotiating with federal prosecutors to pay a fine of as much as $2 billion, and have a subsidiary plead guilty to settle claims about its role in a scheme to loot billions from a sovereign wealth fund in Malaysia, according to two people with knowledge of the matter.
The case stems from a scheme to siphon off more than $2.7 billion of the $6.5 billion raised for the 1Malaysia Development Berhad, known as 1MDB. Federal authorities have that said Jho Low, a flamboyant Malaysian financier, was the principal architect of the plot to bribe public officials that has led to the guilty plea of a former Goldman partner and criminal charges against another of the bank’s executives.
The investigation is focused on violations of money laundering and foreign bribery laws. The settlement could include a guilty plea from Goldman’s subsidiary in Asia, the people said, asking not to be identified because the talks were continuing. The bank may agree to include an outside monitor to review its compliance procedures, a provision that has become common when banks resolve criminal investigations.
A separate fine paid to the government of Malaysia and other regulatory agencies could raise the total financial penalty to more than $2 billion, according to three people familiar with the talks. It’s possible the settlement could be completed by the end of January.
The bank has said it was cooperating with the investigation. Andrew Williams, a bank spokesman, said resolution discussions were continuing, “And it is irresponsible to speculate on an outcome.” A spokesman for federal prosecutors in Brooklyn who are overseeing the investigation declined to comment.
The Wall Street Journal reported the potential guilty plea earlier Thursday.
The bank could instead reach a deferred prosecution agreement, an arrangement in which prosecutors drop all charges if the bank complies with a number of provisions.
Last year, a former Goldman partner, Tim Leissner, pleaded guilty to helping orchestrate the fraud, which involved the sale of bonds to raise money for 1MDB. The bank has said that Mr. Leissner had acted on his own, but that it could have to pay significant penalties to resolve the matter.
On Monday, Mr. Leissner was barred by securities regulators from working in the banking industry. The settlement said unnamed “senior executives” at the bank knew Mr. Leissner did not tell the truth during an Oct. 10, 2012 meeting, when he was asked whether Mr. Low, whom Goldman’s compliance department had declined several times to approve as a client, had any involvement in the bond deals. Prosecutors in charging documents have tended to avoid using the phrase “senior executives” to refer to others at Goldman who may have known about the bribery scheme.
Mr. Low, who was also charged by federal prosecutors and Malaysian authorities, is believed to be living in China and has not made an appearance in court to respond to the charges.
The 1MDB bond deals were a significant source of revenue for Goldman in Asia, at a time that Wall Street was beginning to rebound from the depths of the financial crisis. The bank raked in nearly $600 million in fees for underwriting three bond deals for 1MDB in 2012 and 2013, which the bank had secured without fending off any rival bids.
The money raised by the fund was supposed to finance infrastructure and other development projects to benefit the Malaysian public. But instead, it went to pay bribes to Malaysian officials and fuel the lavish lifestyle of Mr. Low and others, federal authorities have charged.
The billions looted from the fund financed an enormous spending spree that included the purchases of diamonds, Birkin bags, paintings by Picasso and Monet, and financing for the Hollywood film “The Wolf of Wall Street.” In October, Mr. Low agreed to give up as much as $900 million in assets he had procured from the scheme.
The scandal ultimately toppled the government of Malaysia’s former prime minister, Najib Razak, who is now on trial in Malaysia for charges related to the fraud. Malaysian authorities also have charged Goldman and 17 current and former bank executives with wrongdoing.
The 1MDB investigation has dogged Goldman for at least three years, but it became a major crisis for the bank last year when federal prosecutors disclosed that Mr. Leissner had pleaded guilty to foreign bribery and money laundering charges.
Mr. Leissner, who is married to the fashion designer and model Kimora Lee Simmons, agreed to forfeit more than $43 million he had received as part of the scheme. He has been free on bail while he awaits sentencing and has cooperated with the investigation.
Federal prosecutors also charged Roger Ng, an associate of Mr. Leissner, who is set to go on trial in the spring.
The indictment naming Mr. Ng and Mr. Low suggested that an Asian-based Goldman banker, Andrea Vella, also may have known some parts of the scheme, although Mr. Vella has not to be charged with any wrongdoing. A lawyer for Mr. Vella did not respond to messages seeking comment.