Monday, March 8, 2021

Another Goldman Sachs executive barred from banking in 1MDB money-laundering scandal

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Federal bank regulators on Tuesday barred a third Goldman Sachs banker from working for an American bank, the latest fallout from the Wall Street firm’s role in a scandal involving the looting of billions of dollars from a Malaysian sovereign wealth fund.

The Federal Reserve, in a settlement, found that the banker, Andrea Vella, “engaged in unsafe and unsound practices” in connection with Goldman’s role in arranging $6.5 billion bond sales for the 1Malaysia Development Berhad fund, known as 1MDB.

The settlement did not require Mr. Vella to admit wrongdoing and did not require him to pay a financial penalty.

The agreement came as Goldman negotiates a settlement with federal prosecutors over its work with 1MDB, which led to criminal charges against two of Mr. Vella’s subordinates. Goldman could pay a fine of as much as $2 billion and one of its subsidiaries in Asia could be required to enter a guilty plea.

Goldman had hoped to have a deal wrapped before its inaugural investor conference last week. But it could take several more weeks, especially if the settlement involves a deal with Malaysian authorities, according to two people familiar with the discussions who were not authorized to speak publicly.

The Fed specifically faulted Mr. Vella, who resigned from Goldman last weekend, for not doing more to ensure that a Malaysian financier named Jho Low had no role in the bond sales, which generated $600 million in fees for Goldman.

Mr. Low was indicted by federal prosecutors in Brooklyn and prosecutors in Malaysia, who have called him the mastermind of the scheme to steal more than $2.7 billion from the fund. The diverted money was used to pay bribes to Malaysian officials, buy high-priced real estate and provide financing for the movie “The Wolf of Wall Street.”

Lawyers for Mr. Low have maintained his innocence, but he has never made a formal court appearance in either country to respond to the criminal charges. He is believed to be living in China and has occasionally had public relations firms issue statements on his behalf.

Compliance officials with Goldman had repeatedly warned against Mr. Low being involved as an intermediary in the transactions because of questions about the source of his wealth.

In the settlement, the Fed said Mr. Vella had “heightened the potential underwriting risks” with the bond deals because he did not escalate matters within the bank once he had indications that Mr. Low may have been involved with the deals or the bankers working on the transactions.

Source: nytimes.com

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