Criminal charges have been filed against subsidiaries of Goldman Sachs investment bank and key employees for their involvement with stricken Malaysian sovereign wealth fund 1MDB.
According to a statement from Malaysia’s attorney general, Tommy Thomas, “the charges arise from the commission and abetment of false or misleading statements […] in order to dishonestly misappropriate $2.7bn from the proceeds of three bonds issued by subsidiaries of 1MBD, which were arranged and underwritten by Goldman Sachs”.
The face value of the three bonds was $6.5bn (£5.2bn, €5.75bn).
Fines and custodial sentences
Tim Leissner and Roger Ng Chong Hwa of Goldman Sachs are accused of conspiring with Malaysian financier Jho Low, Jasmine Loo Ai Swan (who was then general counsel of 1MDB) and others to bribe Malaysian public officials to secure the participation of Goldman in the three issuances.
The investment bank benefitted to the tune of $600m, “which was several times higher than the prevailing market rates and industry norms”, Thomas stated.
“In addition to personally receiving part of the misappropriated bond proceeds, those employees and directors of Goldman Sachs received large bonuses and enhanced career prospects.”
Malaysia “will seek criminal fines against the accused well in excess of the $2.7bn misappropriated from the bonds proceeds and $600m in fees received by Goldman Sachs, and custodial sentences against each of the individual accused: the maximum term of imprisonment being 10 years”, Thomas added.
Malaysia is not the only jurisdiction pursuing Leissner and Low, among others, for their involvement in the embezzlement of funds from 1MDB.
US prosecutors filed criminal charges against Leissner and Ng in November 2018.
Leissner pleaded guilty to conspiracy to launder money and violate the Foreign Corrupt Practices Act. He has forfeited $43.7m to US authorities. Ng has been detained in Malaysia and is facing extradition to the US.
In March 2017, Singapore banned Leissner, a German national, from working in the city-state’s financial services industry for 10 years.
Leissner, who is married to former US model Kimora Lee Simmons, also made false statement on behalf of Goldman Sachs without the bank’s knowledge and issued a letter to a financial institution in Luxembourg in June 2015 vouching for Low without the knowledge or consent of the bank.
Meanwhile, Low is accused of using 1MDB funds to go on extensive and expensive shopping sprees.
In addition to a jet and yacht, the money has been reportedly used to buy Picasso paintings, jewellery and real estate.
Low’s former girlfriend, supermodel Miranda Kerr, handed over $8.1m worth of jewellery to US authorities in June 2017. Included was an 11.72 carat heart-shaped diamond pendant.
His whereabouts are currently unknown.