The Justice Department arrested former Goldman Sachs banker Ng Chong Hwa in Malaysia on Thursday, and unsealed charges against Tim Leissner, another ex-Goldman banker, who has already pleaded guilty and agreed to pay $43.7 million in restitution of ill-gotten gains.
Both men were charged with conspiracy to commit bribery and conspiracy to commit money laundering.
The Justice Department also announced criminal charges against Low Taek Jho, an alleged mastermind and an intermediary to the Malaysian fund. US officials say he remains at large.
Goldman Sachs itself was not charged.
These are the first US criminal charges in the case which spawned investigations around the world.
- Conspiring to launder billions -
The 1MDB scandal has had a major impact in Malaysia, with allegations of involvement of top officials contributing to the downfall of the long-ruling coalition at elections in May.
Former prime minister Najib Razak has since been arrested and charged over the scandal. He denies any wrongdoing.
The men were charged with conspiring to launder billions of dollars from 1 Malaysia Development Berhad, a sovereign wealth fund set up for development of the country, and conspiring to bribe officials in Malaysia and Abu Dhabi, violating the Foreign Corrupt Practices Act.
Low, in a statement through his spokesman, maintained his innocence.
"Mr. Low simply asks that the public keep an open mind regarding this case until all of the evidence comes to light, which he believes will vindicate him," it said.
Ng was also indicted for conspiring to violate the internal controls at Goldman Sachs, which underwrote about $6.5 billion in bonds issued by 1MDB, the US government said.
The funds were intended "for the benefit of the Malaysian people" but more than $2.7 billion went to kickbacks and bribes, according to the charges.
Goldman Sachs, which garnered $600 million in fees and revenues from three 1MDB bond transactions detailed in the indictments, has said previously it has received subpoenas and requests for information on the case from various governments and regulatory bodies.
Goldman Sachs, which said it is cooperating in the probe, was not named in the DOJ criminal documents, but was referred to as "financial institution #1."
The DOJ said Ng and Leissner repeatedly circumvented Goldman's oversight tools for countering fraud, adding that the "business culture" at the firm, "particularly in Southeast Asia, was highly focused on consummating deals."
The documents refer to a third unnamed Goldman official who is an Italian national. The banker, Andrea Vella, was put on leave in October, according to a person familiar with the matter.
Hiding Low's involvement
Under one scheme involving a 2012 "Project Magnolia" bond offering by 1MDB, Low allegedly told the ex-Goldman bankers they needed to bribe officials in Malaysia and Abu Dhabi to guarantee that the transaction went through.
Hundreds of millions of dollars in bribes were subsequently paid to officials in Malaysia and Abu Dhabi. After the bond transaction was executed, more than $500 million of the bond proceeds were misappropriated into shell companies controlled by Low, Leissner, Ng and other co-conspirators, the government alleged.
Some of the funds went to finance the movie, "The Wolf of Wall Street," a 2013 Oscar-nominated film about Jordan Belfort, a corrupt stockbroker who was sent to prison for fraud, the government said.
Ng and Leissner's efforts in the scheme dated to 2009, when they began cultivating a relationship with Low, who allegedly "worked as an intermediary in relation to 1MDB and other foreign government officials" but did not hold a formal position at 1MDB and was never employed by the government.
Ng, a managing director at Goldman, and Leissner, who worked as Southeast Asia chairman and managing director at Goldman, sought on three occasions to make Low a formal client, but were rebuffed because officials in the compliance group had "concerns" about the source of the person's wealth and deemed he would not be a "suitable" client.
As the bond offerings proceeded, the two men concealed Low's involvement from Goldman Sachs officials.
Leissner is free on a $20 million bond and pleaded guilty before a US judge in August, in Brooklyn Federal Court. He is cooperating with DOJ investigators, The Wall Street Journal reported.
Lawyers for Leissner did not respond to requests for comment. Low is represented by Marc Kasowitz, an attorney who has formerly represented US President Donald Trump, a DOJ spokesman said.
Published : November 02, 2018
By : Agence France-Presse New York