Twice

83 It now takes about days for the typ­i­cal Chi­nese firm to col­lect cash for com­pleted sales, al­most as long as in sim­i­lar emerg­ing-mar­ket economies. Over two years, ac­counts re­ceiv­able at Chi­nese pub­lic com­pa­nies rose 23%, to about $590b, more than the

Bloomberg Businessweek (North America) - - Markets / Finance -

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

At 131 days, in­dus­trial

firms in China take the long­est to con­vert

sales into cash “It’s a big prob­lem

when you have ris­ing in­sol­ven­cies, a bad eco­nomic en­vi­ron­ment, and less liq­uid­ity for small

com­pa­nies.” ——Ma­hamoud Is­lam,

econ­o­mist at Euler Her­mes in Hong Kong

——By Ye Xie and Fox Hu The time it takes for com­pa­nies to be paid rises as China’s GDP

growth falls

88 days

8%

’98

14%

83 days

7%

54 days

’15

Cor­po­rate bank­rupt­cies in China are pro­jected by Euler

Her­mes to climb 20 per­cent this year

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