Former Goldman Sachs banker in 1MDB plea
talks with U.S.: WSJ
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[July 10, 2018]
SINGAPORE (Reuters) - A former
Goldman Sachs Group Inc. <GS.N> banker is in talks with U.S. prosecutors
to potentially plead guilty to criminal charges stemming from an alleged
scheme to steal billions of dollars from a Malaysian state investment
fund, the Wall Street Journal reported, citing people familiar with the
matter.
The report said the talks bring the fast-moving investigation closer to
Goldman, which raised billions of dollars for 1Malaysia Development Bhd
(1MDB).
It also comes after Malaysia's former prime minister, Najib Razak, who
founded the fund and lost his re-election bid earlier this year, was
charged with abuse of power and criminal breach of trust in relation to
SRC International, a former 1MDB unit.
Najib pleaded not guilty to those charges and has consistently denied
any wrongdoing in relation to 1MDB.
Tim Leissner, a one-time Goldman partner and Southeast Asia chairman
hasn't been charged. He is seeking an agreement with prosecutors that
would involve his co-operation with the government's criminal fraud
probe into 1MDB and Goldman, the report said.
A spokeswoman for the U.S. Department of Justice (DoJ) declined to
comment. A lawyer for Leissner also declined to comment.
A Goldman Sachs spokesman told Reuters: "Since we suspended Mr.
Leissner, we have discovered certain activities he undertook that were
deliberately hidden from the firm, which we have brought to the
attention of the relevant authorities who continue to receive our full
cooperation."
Last month, citing sources familiar with the matter, Reuters reported
that Malaysia is considering asking the DoJ to get Goldman Sachs to
return nearly $600 million in fees it earned from bonds raised for 1MDB.
Goldman raised nearly $6.5 billion in three bond sales between 2012 and
2013 for 1MDB. More than $2.5 billion raised from these bonds was
misappropriated by high-level 1MDB officials, their relatives and
associates, according to DoJ civil lawsuits filed in a U.S. court in
2016.
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A man covers his mouth as he walks past a 1 Malaysia Development
Berhad (1MDB) billboard at the funds flagship Tun Razak Exchange
development in Kuala Lumpur, Malaysia, February 27, 2015.
REUTERS/Olivia Harris/File Photo
Goldman earned almost $600 million for the three deals – an amount
critics say is far in excess of the normal 1-2 percent fees a bank
could expect for helping sell bonds.
Goldman has maintained that the outsized fees related to the
additional risks it took on – it bought the un-rated bonds while it
sought investors and, in the case of the 2013 deal which raised $2.7
billion, 1MDB wanted the funds in a hurry for a planned investment.
The WSJ said one potential charge Leissner could ultimately plead
guilty to would be a violation of the U.S. Foreign Corrupt Practices
Act, which bans the use of bribes to foreign officials to get or
keep business.
The report said prosecutors from the U.S. Attorney's Office in
Brooklyn are also investigating whether Goldman violated any laws.
(Reporting by Anshuman Daga; Additional reporting by Joel Schectman
in WASHINGTON; Editing by Neil Fullick)
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