1MDB PUZZLE GROWS

Sachs exec gone

A senior Goldman Sachs official who was involved in the bank’s dealings with a Malaysian state investment fund that is the subject of a sprawling global corruption probe has left the firm.

Toby Watson, a partner who was among those who solicited business from 1Malaysia Development Berhad, known as 1MDB, departed last month, according to people familiar with the matter. He becomes the latest executive who worked with 1MDB to leave the firm.

“Toby’s decision to leave was a personal one that was completely unrelated to any work he did at the firm,” a spokesman said.

Watson couldn’t be reached for comment.

Watson ran the Hong Kong branch of a trading desk within Goldman called Principal Funding and Investing, which engages in complex fund-raisings.

The division has been behind some of Goldman’s most profitable deals, including the insurance swaps with American International Group that paid off handsomely during the credit crisis.

And it was involved in Goldman’s dealings with 1MDB, which have pulled the bank into a global corruption probe.

Goldman raised $6.5 billion for 1MDB, much of which prosecutors now allege was siphoned into personal accounts of government officials and their acquaintances.

Investigators are trying to determine whether Goldman had reason to suspect that money it helped 1MDB raise was misused and, if so, whether the bank was obligated to report those concerns to authorities.

Goldman has said it had no reason to believe the money was being used inappropriately.

Goldman earned nearly $600 million from buying the fund’s bonds and selling them later on to other investors, a trade done out of PFI, according to people familiar with the matter.

Around the time 1MDB was founded in mid-2009, Goldman employees including Watson traveled to Kuala Lumpur to meet fund executives, according to people familiar with the matter.

Some came away with questions about 1MDB, including why it wanted to raise so much money and the lack of investment experience of its employees, the people said.

In 2012, Watson’s desk bought $3.5 billion in two bond issuances by 1MDB, later selling them to external investors at a profit, according to people familiar with the matter. Late that year, Watson was named a partner at Goldman.