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”

Bloomberg Businessweek (Asia) - - CONTENT -

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

Leiss­ner

Sim­mons

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