US Congress acts to audit shell companies after 1MDB scandal

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KUALA LUMPUR: In the wake of the 1MDB scandal, the US Congress is taking action against shell companies carrying out mysterious, and sometimes nefarious, dealings.

The New York Post reported that bipartisan bills introduced last week in both the House and Senate would require the Treasury Department to receive detailed information on the principals behind these shell companies.

It said that transactions involving 1MDB had ensnared Goldman Sachs and its Asian chief, Tim Leissner, in a scandal.

Singapore had banned Leissner from working in the securities industry in the city-state for 10 years and Goldman had been under the spotlight for more than 18 months for its business dealings with 1MBD due to allegations that billions of dollars were misappropriated. That led to the exit of Leissner from Goldman.

Quoting a law enforcement person familiar with the latest development, the report said: “Shell companies were used to facilitate the theft and the laundering of funds, allegedly from the sovereign wealth fund.

“One individual was using those shell companies to hide assets and purchase real estate, and to open up bank accounts to move money, using escrow accounts that lawyers controlled to avoid any money laundering checks.”

He was not specifically referring to Leissner. A Goldman Sachs spokesman was quoted as saying: “The DoJ (US Department of Justice) complaints allege that the siphoning off of 1MDB bond proceeds occurred after the bond offerings had closed, and there are no allegations that Goldman Sachs knew of or was involved in that illegal activity.”

US politicians, whose eyes have been opened by the 1MDB scandal, say it’s time for the US to take action.

“We’re the only advanced country in the world that doesn’t already require disclosure of beneficial ownership information, and my Corporate Transparency Act will change that,” said US Rep Carolyn Maloney, a Democrat, who introduced the House bill with lead co-sponsor, Rep Peter King, a Republican.

“Criminals are taking advantage of state laws by establishing firms — often without a physical presence or business activity — to access our banking system,” King was quoted as saying.

The New York Post quoted Stefanie Ostfeld, deputy head of the US office of international watchdog Global Witness, as saying: “From multimillion-dollar health care fraud to terrorist financing, anonymously owned companies act as getaway cars for all sorts of criminals.

“Swift passage of this legislation will make it harder to move, enjoy and hide dirty money, and demonstrate that Congress is serious about making sure the US is not exploited by criminals and the corrupt who are a risk to national security.”