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Thursday, 23 May 2019

Fed bans Goldman bankers for role in 1MDB

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The US Federal Reserve banned former Goldman Sachs bankers Tim Leissner and Ng Chong Hwa, also known as Roger Ng, from any involvement in the banking industry for their role in the theft of billions of dollars from the Malaysian sovereign wealth fund.

Leissner, who was a partner at Goldman until February 2016, was also fined US$1.42m by the Fed.

While at Goldman’s Asia division Leissner and Ng coordinated three bond offerings arranged by Goldman for 1MDB, in 2012 and 2013 worth US$6.5bn. The funds diverted from 1MDB were then used for the conspirators’ personal benefit and to bribe certain government officials in Malaysia and Abu Dhabi, the Fed said in a statement.

Leissner, who consented to the permanent ban and the fine, had previously agreed to forfeit US$43.7m as part of a guilty plea in federal district for conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act.

Ng was employed by Goldman from 2005 to 2014, according to the Fed. He was a managing director and head of South-East Asia sales for fixed income, currencies and commodities before he left the firm.

Goldman itself has been putting away cash for potential fines related to the 1MDB scandal.

Earlier this month Citigroup bank analyst Keith Horowitz estimated that Goldman could be on the hook for a fine of as much as US$9bn on the high end, factoring in actions from US authorities and regulators.

Leissner pled guilty to criminal charges brought by the Department of Justice in the Eastern District of New York last August.

Ng was indicted in October 2018 on similar charges. He was arrested in Malaysia on or about November 1, 2018, according to the Fed. Also, the US is seeking to extradite Ng to answer the charges in the indictment, the Fed said.

The Fed said the negative publicity created by the pending criminal action against Ng and Leissner and the serious nature of the allegations contained in the indictment all “serve to impair public confidence in Goldman.”

More Goldman employees may face action from the Fed.

In the notice, the regulator noted that Ng and Leissner did not act alone but “conspired with other Goldman employees to knowingly and wilfully circumvent the internal accounting controls of Goldman in connection with the three 1MDB bond transactions”.

In Malaysia, the government is seeking US$7.5bn in reparations from Goldman over its 1MDB deals, which includes fees paid to the bank and bond coupons that were “higher than the market rate”, the country’s Finance Minister Lim Guan Eng said in January.

 

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