Wednesday, October 28, 2020

Goldman Sachs seeks leniency in 1MDB scandal to avoid guilty plea

-

Goldman Sachs is trying to get federal prosecutors to ease up on the bank for its role in a brazen scheme to loot billions of dollars from a Malaysian sovereign wealth fund.

Lawyers for the bank have asked Deputy Attorney General Jeffrey Rosen to review demands by some federal prosecutors that Goldman pay more than $2 billion in fines and plead guilty to a felony charge, according to three people briefed on the matter.

The bank has sought to pay a lower fine and avoid a guilty plea, according to the people, who spoke on condition of anonymity because the talks are continuing.

The request, which was made several weeks ago, is not unusual for a high-profile corporate investigation and often comes in the final stage of settlement talks. But it has been a point of pride for Goldman that it has never had to admit guilt in a federal investigation, and the scandal has already been a black eye for the bank.

- Advertisement -

Authorities in the United States and Malaysia say more than $2.7 billion was diverted from the fund, known as 1MDB, in a scheme that involved the flamboyant financier Jho Low, the country’s former prime minister, and other powerful people. The fund was meant to finance projects for the benefit of the people of Malaysia, but some of the cash went to buy luxury apartments, yachts, paintings and even finance the movie “The Wolf of Wall Street.”

Negotiations have been delayed at times because of the Covid-19 health crisis, but the people said they expected a resolution by early September of the criminal investigation, which has been led by prosecutors in Brooklyn and with the money laundering and kleptocracy group in Washington.

Representatives for prosecutors in Brooklyn and the Justice Department declined to comment. Jake Siewert, a Goldman spokesman, said the bank was “continuing to engage with all relevant authorities.”

A settlement would resolve Goldman’s place in the nearly five-year federal investigation into allegations of foreign bribery, corruption and money laundering involving 1MDB, more formally known as the 1Malaysia Development Berhad fund. Goldman raised $6.5 billion for the fund, earning $600 million in fees.

- Advertisement -

Two former Goldman executives were charged in the United States. One, Tim Leissner, has already pleaded guilty and is cooperating. He said that he and others at Goldman conspired to circumvent the bank’s internal controls to work with Mr. Low to pay bribes to officials in Malaysia in order to secure the lucrative bond work for the bank. Mr. Leissner, who is married to the fashion designer and model Kimora Lee Simmons, personally profited from the scheme and agreed to forfeit up to $43.7 million.

Prosecutors in the United States began investigating in 2015, but the case became one of the top Wall Street enforcement matters during the Trump administration.

A watchdog group, Citizens for Responsibility and Ethics in Washington, recently said it wanted to know more about the interest of Trump appointees in the case. Attorney General William P. Barr and Assistant Attorney General Brian Benczkowski — both of whom previously worked at Kirkland & Ellis, one of the firms representing Goldman Sachs — obtained ethics waivers that allowed them to participate in the 1MDB investigation. (Mr. Rosen had been a lawyer at Kirkland, but he did not need an ethics waiver because he had left the law firm more than two years ago.)

“This is a hugely significant case and we are trying to figure out if we need to be concerned whether there are conflicts of interest on the part of leading Department of Justice officials,” said Noah Bookbinder, the organization’s executive director.

In February, the group sent a Freedom of Information Act request to the Justice Department seeking copies of emails or any other records documenting either man’s involvement in the 1MDB investigation. The department, which has not produced any documents, declined to comment on the request.

On Wednesday Mr. Benczkowski told Justice Department staff that he was leaving as of July 3. In an email, the department cited the work by prosecutors on 1MDB as one of his accomplishments.

The department’s pursuit of the 1MDB case is notable because the Trump administration and Mr. Barr have not made white-collar prosecutions a top priority. The prosecution of white-collar crime has never been so low since tracking began in 1986, according to Trac, a federal criminal justice database affiliated with Syracuse University.




“If he does not want to be as aggressive on corporate crime, that is his prerogative,” Rebecca Roiphe, a former prosecutor and professor at New York Law School who specializes in legal ethics, said of Mr. Barr. “But these kind of appeals can give cause for concern when there are things that the public can’t see what is being done.”

Prosecutors in Malaysia have filed their own criminal charges against the bank and 17 executives, and are said to also be seeking a multibillion-dollar penalty. In its appeal to Mr. Rosen, Goldman contends that any fine from the Justice Department should be mitigated by what it will have to pay to Malaysia, as well as regulators like the New York Department of Financial Services and the Securities and Exchange Commission, according to the people briefed on the matter.

The bank also wants Mr. Rosen to reduce a potential guilty plea by one of its foreign subsidiaries to something less scarring, like a deferred prosecution agreement, the people said. Under such an agreement, which is common in foreign corrupt practices cases, all charges are dismissed after a designated period of time.

David Solomon, the bank’s chief executive officer, has apologized several times for Goldman’s role in the 1MDB scandal. He has attributed the wrongdoing to a couple of rogue employees.

- Advertisement -

Besides Mr. Leissner, prosecutors in the United States have charged the former Goldman banker Roger Ng, who is awaiting trial on foreign bribery and money laundering charges. A third former Goldman executive, Andrea Vella, was not charged but prosecutors referred to him as a co-conspirator in court filings. He has been barred from the financial industry by the Federal Reserve.

Even with a settlement, federal prosecutors will not be done with the 1MDB matter.

Mr. Leissner, who pleaded guilty in August 2018, had been scheduled for sentencing this month, but that was recently moved to January. Prosecutors, who have not publicly disclosed the terms of Mr. Leissner’s bail, made the request in a sealed letter to a federal judge. Mr. Ng, who pleaded not guilty, is set to go on trial in Brooklyn federal court early next year.

Mr. Low has never appeared in federal court.

Original article on nytimes

MUST READ

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

UAE suspends licences of 200 law firms over anti-money laundering compliance

Practicing licences of 200 law firms in the UAE have been suspended for a month for not following the prescribed procedures to combat money...

EU takes legal action against Cyprus and Malta over investment for citizenship scheme

The European Union’s executive said on Tuesday it was launching legal action against Cyprus and Malta over their investor citizenship programmes, also known as...

Former Malawi minister sentenced to six years in prison over passport corruption scandal

A court in Malawi’s capital Lilongwe on Thursday sentenced a former home minister to six years in prison after he was found guilty in...

Brother of ex-Pakistan PM Nawaz Sharif jailed for money laundering

Pakistan Muslim League-Nawaz (PML-N) chief and Opposition Leader in the National Assembly Shehbaz Sharif was sent to jail on Tuesday in a money laundering...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks