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Implications of Leissner’s ‘confessions’

November 8, 2018

* The boys in blue catch up with the masters of the universe
* Jho Low likely bought Rosmah’s pink diamond necklace  
* Justo hands ‘important’ files to MACC
DOJ requests Thailand’s co-operation to recover jewellery gifted by Jho Low to his mother
* Goldman Sachs ex-bankers ‘broke the law’ over 1MDB – Chief Executive  

Guilty as charged: Leissner’s guilty plea has already cast doubts on the integrity of several of his associates in Goldman Sachs. — Bloomberg

ON Thursday, Goldman Sachs’ Tim Leissner pleaded guilty in a court in New York to charges of conspiring to launder money and pay bribes as well as kick-backs from the proceeds raised via 1Malaysia Development Bhd (1MDB).

By pleading guilty to the charges that were brought by the Department of Justice (DoJ) in the United States, Leissner effectively admitted to the DoJ’s charges on how money raised by 1MDB was used to pay bribes and fund an expensive lifestyle of several high-ranking officials in Malaysia, Abu Dhabi and a particular relative of a high-ranking official in Malaysia.

He also admitted that several people in Goldman Sachs knew that the funds were going to be diverted but supposedly kept the information from the Compliance and Intelligence groups of Goldman Sachs to avoid jeopardising the investment bank’s dealings with 1MDB.

Leissner’s plea came together with the arrest of Roger Ng, who was also with Goldman Sachs when 1MDB raised the funds in 2012 and 2013.

The once-high-flying Leissner was in charge of the region, while Ng was the managing director of the US-based investment bank in Malaysia.

The two, together with fugitive businessman Low Taek Jho or better known as Jho Low, were identified as key figures in 1MDB raising US$6.5bil (RM27.3bil) in three bond issues in 2012 and 2013 and the diversion of the funds. Low is still on the run, while Ng is to be extradited to the United States.

Of the amount raised, a staggering US$2.7bil (RM11.34bil) was diverted to bribes, kick-backs, buying gifts and financing the luxury lifestyle of a host of people in Malaysia and Abu Dhabi.

Leissner’s guilty plea has already cast doubts on the integrity of several of his associates in Goldman Sachs. They supposedly knew of what was happening but conspired to hide the information from Goldman Sachs.

If Goldman Sachs is facing the heat from Leissner’s guilty plea, shouldn’t it have some kind of implications on the developments in Malaysia?

Former Prime Minister Datuk Seri Najib Tun Razak and his wife Datin Seri Rosmah Mansor are facing a host of criminal charges from money laundering to abuse of power. The amount in question runs into hundreds of millions of ringgit, parts of it allegedly coming from funds raised by 1MDB.

The DoJ charge sheet does not name Najib by person. However, the description of the high-ranking “Malaysian Official No. 1” (MO1) that allegedly benefitted from the funds diverted from 1MDB fits that of the former Prime Minister.

The DoJ charge sheet, to which Leissner pleaded guilty, says that “MO1” was a high-ranking government official and also in the Finance Ministry from 2009 to around 2018. This person had the authority to approve high-level transactions in 1MDB.

In interviews so far, Najib has denied any knowledge of that money which he received came from funds raised by 1MDB. He also denies knowing that a multi-million-dollar piece of jewellery “presented” to his wife was actually bought using proceeds from 1MDB’s bond issues.

He contended that it was a gift from royalty in the United Arab Emirates and that expensive gifts were common among dignitaries.

However, according to Leissner’s charge sheet, on Oct 10, 2014, the banker and a co-conspirator from Abu Dhabi transferred US$4.1mil as part payment to a jeweller in New York for jewellery meant for the wife of MO1.

The payment to the jeweller was part of a kick-back with the hope of securing the mandate to list 1MDB’s energy unit. The listing of the energy unit did not take place eventually, as it failed to meet the requirements of the authorities.

Going through Leissner’s charge sheet, the intention to defraud 1MDB was already there right from the beginning in 2009.

That was the time when the birth of 1MDB took place under the original name of the Terengganu Investment Authority (TIA). Low was the adviser to TIA, which later became 1MDB.

In 2009, 1MDB raised RM5bil through a debt paper. The bulk of the funds was transferred to a company controlled by Low. Through several transactions, some portions came back to Malaysia and also funded the lifestyle of the relatives of MO1.

1MDB issued two tranches of US$1.75bil in May and October 2012 and US$3bil in March 2013.

According to the charges, as early as February 2012 when planning took place for the first bond issue of US$1.75bil in a meeting outside Malaysia, Low had told Leissner and Ng about some portions of the money needed to be paid as kick-backs and bribes to Malaysian and Abu Dhabi officials.

In the second US$1.75bil tranche, Leissner knew that the funds would go to MO1 and a relative of MO1, among other people.

The court ordered the forfeiture of US$43.7mil (RM182.7mil) from Leissner for his role in the crimes committed. His admission of guilt has implicated at least three other colleagues in Goldman Sachs who were aware that past of the money was to be used for bribes and kick-backs.

The DoJ charge sheet also stated that several people within 1MDB knew about it as well.

There are many who worked with 1MDB – as top executives – and sat on the board between 2009 and 2014.

Didn’t they know that a substantial chunk of the proceeds from the bond issuances was paid as kick-backs and bribes to officials in Malaysia and Abu Dhabi?

Key officials in 1MDB insisted that between 2015 and mid-2018 the proceeds of 1MDB’s from the fund-raising were in order and accounted for. Didn’t they know of the kick-backs and bribes when they went a roadshow to defend the former Prime Minister and 1MDB?


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