US charges financier and two bankers over looting of fund
Trio including former Goldman Sachs employees accused of theft of billions from Malaysia‘s 1MDB
US prosecutors unveiled criminal charges on Thursday against two former Goldman Sachs bankers and Malaysian financier Low Taek Jho tied to the alleged theft of billions from Malaysian sovereign wealth fund 1MDB.
Prosecutors in the US Attorney’s Office in Brooklyn announced that Tim Leissner, former partner for Goldman Sachs in Asia, had pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act, and agreed to forfeit $43.7m.
Roger Ng, the other charged former Goldman banker, was arrested in Malaysia at the request of US authorities and is expected to be extradited, according to John Marzulli, a prosecution spokesperson.
The third person, the financier known as Jho Low, remains at large. Malaysian authorities have issued an arrest warrant for him and have also applied for an Interpol red notice seeking assistance from the United Arab Emirates, Indonesia, India, Myanmar, China and Hong Kong.
Low, whose Malaysian passport has been revoked, has previously denied any wrongdoing.
Lawyers for Leissner and Low could not immediately be reached for comment. It was not clear who is representing Ng.
Goldman has placed its former co-head of Asia investment banking, Andrea Vella, on leave over his role in the firm’s involvement in the case, pending a review of allegations, Bloomberg said on Thursday.
The government of former Malaysian prime minister Najib Razak set up 1Malaysia Development Berhad, or 1MDB, in 2009. An estimated $4.5bn was misappropriated from 1MDB by high-level officials of the fund and their associates between 2009 and 2014, the US justice department has alleged.
Najib has consistently denied wrongdoing in connection with alleged graft involving 1MDB.
According to the indictment against him, Low never held a formal position with the fund but he worked as an intermediary in numerous 1MDB transactions involving Goldman and others.
Prosecutors say Low, Ng and Leissner conspired to launder the proceeds of fraud involving 1MDB through the US financial system. Some of the laundered funds were then allegedly used to pay bribes to obtain business for Goldman. Other funds were used for the personal benefit of defendants, including purchases of luxury US real estate and art.
Goldman did not respond to a request for comment but has repeatedly denied any wrongdoing and said it is fully co-operating with authorities.
According to prosecutors, the investment bank generated about $600m in fees for its work with 1MDB, which included three bond offerings in 2012 and 2013 that raised $6.5bn. Leissner, Ng and others received large bonuses in connection with that revenue.
While US prosecutors have previously filed civil asset forfeiture suits for assets allegedly bought with some of the stolen funds, these are the first criminal charges the justice department has brought against individuals in the case under the Foreign Corrupt Practices Act, a federal law targeting official bribery abroad.
At least six countries, including Malaysia, the US and Switzerland, have been investigating alleged thefts from 1MDB.
The 1MDB investigations in the US and Malaysia have gathered pace since Najib unexpectedly lost a general election in May to Mahathir Mohamad, who returned to power 15 years after he retired as prime minister.
Since the election, Malaysian authorities have brought 38 charges against Najib. Many of the charges multiple counts of corruption, money laundering and criminal breach of trust are linked to 1MDB.
Najib has pleaded not guilty to all the charges and has consistently denied wrongdoing. / Reuters/Bloomberg