Ex-Goldman Sachs banker in plea talks in US

SINGAPORE: A former Goldman Sachs Group Inc banker is in talks with United States prosecutors to potentially plead guilty to criminal charges stemming from an alleged scheme to steal billions of dollars from 1Malaysia Development Bhd (1MDB), the Wall Street Journal reported.

The report said the talks brought the investigation closer to Goldman, which raised billions of dollars for 1MDB.

It comes after former prime minister Datuk Seri Najib Razak, who founded 1MDB, was charged with abuse of power and criminal breach of trust in relation to SRC International, a former 1MDB unit.

Tim Leissner, a one-time Goldman partner and Southeast Asia chairman, has not been charged.

He was seeking an agreement with prosecutors that would involve his cooperation with the government’s criminal fraud probe into 1MDB and Goldman, the report said.

A spokesman for the US Department of Justice (DoJ) declined to comment. A lawyer for Leissner also declined to comment.

A Goldman Sachs spokesman said: “Since we suspended Leissner, we have discovered certain activities he undertook that were hidden from the firm, which we have brought to the attention of the relevant authorities who continue to receive our cooperation.”

Last month, Reuters reported that Malaysia was considering asking the DoJ to get Goldman Sachs to return nearly US$600 million (RM2.4 billion) in fees it earned from bonds raised for 1MDB.

Goldman raised nearly US$6.5 billion in three bond sales between 2012 and 2013 for 1MDB. More than US$2.5 billion raised from these bonds was misappropriated by high-level 1MDB officials, their relatives and associates, according to DoJ suits filed in a US court in 2016.

Goldman earned almost US$600 million for the three deals — an amount critics said was far in excess of the normal one to two per cent fees a bank could expect for helping sell bonds.

Goldman maintained that the outsized fees related to the additional risks it took on — it bought the unrated bonds while it sought investors and, in the case of the 2013 deal that raised US$2.7 billion, 1MDB wanted the funds in a hurry for a planned investment.

WSJ said one potential charge Leissner could plead guilty to would be a violation of the US Foreign Corrupt Practices Act, which banned the use of bribes to foreign officials to get or keep business.

The report said prosecutors from the US Attorney’s Office in Brooklyn were investigating whether Goldman violated any laws.