An awkward embrace with Malaysia’s prime minister leads to a Goldman star’s downfall
Lucrative deals with a Malaysian government fund bring trouble “That’s a bit too cozy. A bit too overly generous”
A former colleague describes Tim Leissner as the kind of banker who could hop in a canoe, paddle upstream, and come back with a fee. As a top executive for Goldman Sachs in Asia, he helped build a thriving business in
Malaysia, culminating in $6.5 billion in bond sales for government-run investment fundnd 1Malaysia Developmentt Berhad, known as 1MDB. The transactionsnsactions made the bank $593 million,ion, says a person familiar with thehe matter.
Now, 1MDB is at the heart of a political crisisis for Malaysian Prime Ministerr Najib Razak, who over-versees the fund’ss advisory board.d. He faces questionss over whether the money in the fund hass been spent as intendedded or siphoned off. Swiss prosecutors suspectuspect $4 billion may have been misappropriatedopriated from 1MDB.
Goldman Sachschs and Leissner haven’tn’t been accused of wrongdoing,ongdoing, but the bankerr left his job as Southeast Asiaa chairman for the firm in February.bruary. He was under scrutinyy for his work on an Indonesianian mining venture, and foror writing an allegedly inaccurateaccurate reference letter.er.
Few corporationsations have mastered the mix of money and power like New York-based Goldman Sachs, whose alumni have become U.S. lawmakers, Treasury secretaries, and central bankers. Leissner’s rise and fall shows how lucrative— and fraught—that approach can be when the bank exports it worldwide. Leissner’s lawyer, Jonathan Cogan, didn’t respond to messages. Edward Naylor, a spokesman for Goldman Sachs, declined to comment.
Leissner joined Goldman Sachs in 1998, becoming chief of staff to the president of the firm’s Asia operations and later head of investment banking in Singapore. He showed a talent for making impressive contaccontacts. In May 2006 he was sitting onstageonsta at a news conference with MalayMalaysian billionaire Syed Mokhtar Al-BBukhary, who announced that hhis conglomerate was taktaking over power producer MalakoffMal in what it called “the largest acquisiacquisition ever undertaundertaken in Malaysia.” GoGoldman Sachs was an adviser on the transaction.trans That year, LLeissner made partnpartner. The firm later hehelped manage the initial public offeriofferings of Malaysia’s bibiggest wireless opera-o tortor and lalargest pay-TV broadcaster.broadcas
The 1MDB deadeals were even more remarremarkable. The fund, originaloriginally set up by Malaysia’s oioil-rich Terengganu state, wwas to be used for projects inincluding a financial center forf the capital city Kuala LLumpur. In 2012 and 2013, GGoldman Sachs helped the fund borrow billions of dollars via three bond sales. Leissner was an adviser to the fund early on, according to a former colleague familiar with the sales. The $593 million Goldman Sachs made dwarfed what banks typically make from government debt deals.
“There were large requirements, and Goldman was one of the few firms, in fact the only firm, that could provide the solution that was required,” says Arul Kanda, president of 1MDB. “Overall, the objectives were met.” He wouldn’t comment on Leissner. The bank said last year that
fees and commissions reflected the risks it assumed.
Leissner at one point recommended that the firm hire the daughter of a close aide to Prime Minister Najib, according to the Wall Street Journal. In 2013, at an event in San Francisco, Leissner posed for a photo with the leader and Kimora Lee Simmons, who is now Leissner’s wife. Simmons, a model and fashion designer who was previously married to music mogul Russell Simmons, posted the picture to her Twitter feed, which has 1.6 million followers.
“There’s no law against bankers meeting with heads of state,” says Wong Chen, an opposition member of Malaysia’s parliament. But of Goldman’s relationship with 1MDB, he says, “That’s a bit too cozy, a bit too generous.”
Last year, investigators probed hundreds of millions of dollars that showed up in the prime minister’s bank accounts. “I am not a thief,” Najib said in July. The attorney general Najib appointed last year cleared him of wrongdoing, and said in January that the prime minister got $681 million as a gift from Saudi Arabia’s royal family. He said $620 million was returned. That same month, Swiss prosecutors asked Malaysia for help investigating 1MDB over the billions of dollars they suspected had been misappropriated. The Swiss said the inquiry wasn’t focused on Najib. A spokesman for Najib declined to comment for this story.
U.S. authorities are exploring whether Goldman Sachs misled 1MDB bondholders or broke anticorruption laws, the Journal has reported. The U.S. Department of Justice subpoenaed Leissner in February, but told him he’s not a target, according to a person briefed on the matter.
Goldman Sachs reviewed the bond sales and found no indication the firm or Leissner engaged in wrongdoing, two people familiar with the process say. Even so, the bank stepped up scrutiny of him after he advised a group last year trying to buy Newmont Mining’s Indonesian copper operations.
One investor in the project was Sudjiono Timan, former head of a government-owned Indonesian brokerage who was convicted of corruption in 2004. The conviction was overturned in 2013. Goldman Sachs told Leissner it wouldn’t move ahead if Timan was a sponsor, two people familiar with the matter say. Timan withdrew, but Goldman Sachs pulled out when it learned he was still an adviser, the people say. The bank then examined Leissner’s messages and found a reference letter he wrote that it said in a regulatory filing was “inaccurate and unauthorized.” The filing didn’t say who the letter was written to or about.
Leissner, whose father was a Volkswagen executive in Yugoslavia during the Bosnian War, graduated from Germany’s University of Siegen and got an MBA from the University of Hartford in Connecticut in 1992. He was listed as “Dr. Leissner” on a program for a 2001 gathering of young Asian leaders. In a biography he provided for another forum in 2007, he said he had a doctorate in business administration from Somerset University. A school with that name offered degrees for $995, a retired federal investigator told a U.S. congressional committee on education in 2004.
Goldman’s business in Malaysia, where it was one of the top banks four years ago, has fallen far. It ranked 17th for local mergers-and-acquisitions work last year, and wasn’t involved in any equity or debt deals, data compiled by Bloomberg show.
The firm put Leissner on leave in January, and he resigned soon after. He
moved to California, where