KUALA LUMPUR: A former top Goldman Sachs Group executive involved in 1MDB deals may plead guilty to criminal charges related to the fund, The Wall Street Journal (WSJ) reports.
Quoting “people familiar with the matter”, WSJ reported that former Goldman partner and Southeast Asia chairman Tim Leissner was “seeking an agreement with prosecutors that would involve his cooperation with the government’s criminal-fraud probe into 1MDB and Goldman”.
It said Leissner could plead guilty to violation of the US Foreign Corrupt Practices Act, which bans the use of bribes to foreign officials to get or keep business.
Goldman Sachs made Leissner head of investment banking in Singapore in 2002. He soon helped the bank soar in Southeast Asia, especially by bagging billion-dollar deals with 1MDB.
He forged a close relationship with Low Taek Jho, or Jho Low, whom US prosecutors allege is the mastermind of the purported fraud. The new Malaysian government has issued a warrant for the arrest of Low, who is believed to be in China.
“Since we suspended Mr Leissner, we have discovered that certain activities he undertook were deliberately hidden from the firm, which we have brought to the attention of the relevant authorities,” WSJ quoted a Goldman spokesman as saying.
It reported that a lawyer for Leissner had declined to comment on the bank’s statement and that a spokesman for the US Attorney’s Office in Brooklyn and a spokeswoman for the Department of Justice (DoJ) also declined to comment.
Bloomberg had earlier reported that Goldman Sachs, where Low’s brother known as Szen had worked, made US$593 million working on three bond sales that raised US$6.5 billion for 1MDB in 2012 and 2013.
Goldman Sachs later reviewed the deal but found Leissner had not engaged in any wrongdoing. However, it told him to go on leave in early 2016 when it found some issues over an unrelated matter involving an Indonesian deal. Leissner subsequently resigned.
He was later subpoenaed over the 1MDB affair by US investigators. He was told that he was not the target, Bloomberg reported.
Leissner has been barred from doing business in Singapore while the Financial Industry Regulatory Authority, a US industry body, banned him from the securities industry last year following his failure to respond to requests for documents and other information stemming from his departure from Goldman, WSJ reported.
1MDB is now the subject of investigation in several nations. Former prime minister Najib Razak was charged with four counts of criminal breach of trust and abuse of power in relation to a former subsidiary of 1MDB, SRC International. He pleaded not guilty. Najib is the first to be charged in Malaysia over the 1MDB affair.
The DoJ has alleged in civil lawsuits that US$4.5 billion was looted from 1MDB. US investigators claim 1MDB was used as a political slush fund and that associates of a top politician had used the money to buy real estate, art and other luxuries in England, the US and elsewhere.
WSJ reported that prosecutors from the US Attorney’s Office in Brooklyn were also investigating whether Goldman had violated any law in relation to the 1MDB deals.
Billions of dollars raised through the bond offerings, it said, were almost immediately routed to bank accounts connected to figures in the probe, including Low and a top politician in Malaysia.
Goldman has said it did nothing wrong and had no way of knowing there might be fraud surrounding 1MDB.