The Monetary Authority of Singapore, the Republic’s central bank, has issued a lifetime prohibition order against Tim Leissner, a former banker at global investment banking firm Goldman Sachs after he pleaded guilty to the criminal charges slapped against him by the United States Department of Justice (DOJ) in relation to the 1Malaysia Development Berhad (1MDB) graft scandal.
Channel NewsAsia reported that Leissner had also admitted to being involved “in a conspiracy to obtain business from 1MDB for Goldman Sachs through bribes and kickbacks” to government officials in Abu Dhabi and Malaysia, and by “embezzling funds from 1MDB for himself and others”.
The lifetime ban is an upgrade from the 10-year prohibition order made against Leissner last year after he was found to have “issued an unauthorised reference letter on behalf of Goldman Sachs (Asia) L.L.C. to a financial institution based in Luxembourg where he had made false statements without the firm’s knowledge,” according to the Authority in a statement on Wednesday (19 Dec).
The 10-year ban entailed prohibiting Leissner from “performing any regulated activity under the Securities and Futures Act (SFA)” and “taking part, directly or indirectly in the management of any capital markets services firm in Singapore,” added MAS.
“After careful consideration of Mr Leissner’s admission to participation in the conspiracy, as well as US DOJ’s criminal actions against him, MAS has decided to vary the PO against him,” the Authority announced.
“The latest actions against Mr Leissner arose from the close cooperation and continuing investigations by law enforcement and regulatory authorities in the US, Singapore and other countries,” it concluded.
Meanwhile, New Straits Times reported that Leissner was also charged by the Malaysian authorities for alleged money laundering in relation to the 1MDB scandal, alongside Roger Ng, a managing director who has been arrested in Malaysia.
1MDB employee Jasmine Loo and infamous Malaysian financier Jho Low were also slapped with the same charges.
Reuters reported that according to the charge sheets, the individuals may face up to 10 years of imprisonment and fines of at least RM 1,000,000 (US$240,000) should they be found guilty as charged.
The Edge Markets reported that two Goldman Sachs units — Goldman Sachs (Singapore) Pte and Goldman Sachs (Asia) LLC — were charged with “abetting Goldman Sachs International in the omission of material information and the publishing of untrue statement in the offering circulars for the bonds”.
The charges were made alongside those against Goldman Sachs International (UK), “which had arranged the sale of three bonds — two in 2012 and one in 2013,” and Goldman Sachs (Asia) LLC, which is “a key U.S.-registered unit of the bank”.
The bank’s Kuala Lumpur-based unit, however, has not been charged, according to New Straits Times.
Goldman Sachs was accused of “omitting key facts on the fund’s management – including the role of Low,” who is described as the “operator and key intermediary for 1MDB,” on top of making “untrue statements about the planned use of proceeds from a US$3 billion bond sold in 2013”.
Malaysia is seeking US$600 million — the amount received by Goldman Sachs in fees — as well as the allegedly misappropriated US$2.7 billion bond proceeds from both Goldman Sachs and the accused individuals.
Goldman Sachs, however, has “consistently denied wrongdoing”.
“Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest. These charges do not affect our ability to conduct our current business globally,” the firm insisted.
CNBC, however, revealed that current and former employees are of the opinion that “deals as large as those that helped create the $6.5 billion 1MDB fund require scrutiny from several top firm-wide committees”.
“The 2012 and 2013 bond transactions at the heart of 1MDB were “bought deals” that meant Goldman had to use its capital to buy newly created securities before offloading them to investors. That’s riskier than in more typical arrangements where Goldman is merely distributing bonds to investors,” reported CNBC.
Speaking to CNBC, one former Goldman Sachs employee who wished to remain anonymous said: “Anyone who’s been there a long time knows you can’t do big things without senior people knowing, period.”
“No matter how senior you are, there’s always somebody above you. So a lot of people had to decide they were comfortable committing billions of dollars to this.”
Bloomberg reported that “one of the biggest revelations in recent weeks is that the alleged mastermind, Jho Low, attended meetings” with Lloyd Blankfein, as chairman at Goldman Sachs.
Dennis Suskind, who hired Blankfein at Goldman’s J. Aron & Co. unit and was a partner, said: “It doesn’t smell right, but I just don’t know.”
“The thing about the firm is that they should have been monitoring it closer,” he added.
Blankfein, according to Bloomberg, “led the firm through the financial crisis to the biggest profits in company history, and under him the stock outperformed most big-bank rivals,” and “spent much of the last decade cleaning up Goldman’s image after it paid a then-record $550 million fine in 2010 to settle claims it misled subprime investors”.
“The billionaire”, added Bloomberg, “led a three-year review of company standards, and Goldman dedicated hundreds of millions of dollars to philanthropic work for women and small businesses”.
When asked weeks ago what 1MDB means for Goldman, Blankfein warned: “Well, it’s not good.”