Goldman Sachs scrutinized during Malaysian fraud inquiry

Chris Lee

A former Goldman Sachs banker had a criminal complaint filed against him by federal prosecutors earlier in 2018 for alleged involvement in a Malaysian forex fraud scandal, but the charges were ultimately never processed due to a battle for power in the US Justice Department, it has been claimed. This has led to a greater case concerning Goldman Sachs at large, it was revealed today.

The investigation surrounds the disappearance of approximately USD $4bn from a vast government investment fund in Malaysia entitled 1Malaysia Development Berhad (1MDB).

The inquiry is the responsibility of Brooklyn-based prosecutors, who have now fixed their sights on a much more significant target than one Wall Street Banker – they are now investigating the banking giant Goldman Sachs itself. This is not the first time in recent months that the banking leviathon has been looked into regarding fraud charges.

It is believed that a small group of individuals with an association to Najib Razak, former Malaysian Prime Minister, illegally appropriated capital from the state fund in order to purchase such commodities as yachts, paintings and real estate.

The bank has consistently played down its role in the 1MDB case, claiming that it was not conscious of how monies from the fund were being used. Goldman Sachs has maintained that it is committed to full cooperation with the investigation.

“Goldman Sachs has no visibility into whether some of the funds we helped raise for 1MDB may have been subsequently diverted to other purposes,” claimed Michael DuValley, a spokesman for Goldman Sachs.

“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.”

Prosecutors from the US attorney’s office in the Central District of California in Los Angeles told their associates in Brooklyn that it was their intention to criminally charge Tim Leissner, the former Goldman Sachs investment banker who was working closely with the Malaysian fund. Charges included one count of delivering misleading information to the bank concerning how the resources were being utilized. This was an accusation that resonated with Leissner’s previous actions, as he had already been sanctioned for the same charge by Singaporean securities regulators.

Former Malaysian PM Najib Razak was officially charged on Wednesday 8 August with three separate counts of money laundering in relation to the 1MDB state fund. This comes one month after the disgraced former Prime Minister was incriminated with abuse of power charges and three counts of criminal breach of trust.

Razak was alleged to have received three international money transfers equalling MYR 42m in total.

The US government is presently seeking to recover approximately USD $540 of misappropriated capital which disappeared from the Malaysian state fund.

Earlier this year in June, the Malaysian Finance Minister Lim Guan Eng claimed that the incumbent government planned to pursue restitution from Goldman Sachs for a proportion of the missing money.

Chris Lee

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