US charges financier, former Goldman bankers for 1MDB

Prime Minister Mahathir Mohamad's adviser Daim Zainuddin had previously said Low attempted to contact him several times on Sept 6

United States officials unveiled criminal charges on Thursday against two former Goldman Sachs bankers over the scandal-plagued Malaysian sovereign wealth fund 1MDB, raising fresh questions about corporate culture at the prestigious investment bank.

Two former Goldman Sachs investment bankers were charged Thursday with helping to raise money for a Malaysian investment fund that has lost $4 billion, according to federal prosecutors.

Mr. Leissner, the charging documents said, arranged to pay bribes and kickbacks to officials in Malaysia and Abu Dhabi with either the help or knowledge of several unnamed conspirators, one of whom was identified as "an Italian national who was employed as a participating managing director" at Goldman.

These are the first criminal charges brought in the case, and the indictment accuses the men of laundering dirty money through the USA financial system by purchasing luxury New York City real estate, artwork from an unnamed New York-based auction houses, and by funding unspecified major Hollywood productions.

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Goldman Sachs arranged bond offerings that helped the fund raise more than US$6 billion, much of which, according to worldwide authorities, was squirrelled away in private accounts and used to buy yachts, paintings and high-end real estate. The banker, Andrea Vella, was put on leave in October, according to a person familiar with the matter.

The alleged misappropriation of billions of dollars from the 1MDB fund has become the focus of an worldwide scandal reaching from Malaysia to the United States to Hong Kong.

The money was supposed to support development projects, but prosecutors say the three men "conspired to launder" more than $2.7bn through the United States financial system, and used this money to pay bribes and "for the personal benefit of themselves and their relatives".

Roger Ng, the other charged former Goldman banker, was arrested in Malaysia at the request of US authorities and is expected to be extradited, according to John Marzulli, a spokesman for the prosecution. Low misappropriated billions of dollars from the 1MDB fund. Prosecutors from the Justice Department's money-laundering and asset-recovery division also played an active role in the foreign bribery investigation. Working with the FBI, Indonesian authorities seized Low's $250 million luxury yacht Equanimity off Bali in February and Malaysia's government is now auctioning it.

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Goldman provided an array of services to the fund, including helping it sell billions of dollars in bonds to investors, earning about US$600-million in fees for its work.

The investigation rocked Malaysian politics earlier this year, leading voters to oust Mr. Najib.

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". It has seized 240 million Singapore dollars ($180 million) of property and cash and says about half of that belonged to Low and his immediate family.

Goldman did not immediately have a comment Thursday. Low did not have an immediate comment. It is unclear if Mr Ng has a lawyer. Such payments were "known to Ng, Leissner and other employees" of the bank, according to prosecutors.

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