friday, 9 august of 2019

Fraud

Malaysia Files Criminal Charges Against Goldman Execs in 1MDB Scandal

Malaysia expanded efforts to prosecute Goldman Sachs Group Inc. employees it alleges were involved in the 1MDB fraud, filing criminal charges against more than a dozen current and former senior executives based around the world.

Vice Chairman Richard J. Gnodde, who heads the Wall Street firm’s international business in London, and J. Michael Evans, a former partner at the U.S. bank who’s now president of Alibaba Group Holding Ltd., were among those named. Other high-profile people charged include a former adviser to Margaret Thatcher and the bank’s chief risk officer.

The 17 current and former employees were directors of three Goldman Sachs units that Malaysia has accused of misleading investors when arranging $6.5 billion in bond sales for the state investment fund, whose full name is 1Malaysia Development Bhd., in 2012 and 2013.

The charges mark an escalation of Malaysia’s campaign to recoup funds it says were embezzled from 1MDB. Law-enforcement agencies in the U.S. and Singapore are also investigating the money trail for billions of dollars that were allegedly siphoned off. U.S. prosecutors have charged two former bankers at Goldman Sachs, which received $600 million in fees for the bond sales.

Malaysian officials allege that the directors knew the funds would be misappropriated. The country announced charges against the three Goldman Sachs entities in December, though prosecutors have struggled to serve to those units. Malaysia will seek custodial sentences and criminal fines against the individuals, Attorney General Tommy Thomas said in a statement Friday.

“We believe the charges announced today, along with those against three Goldman Sachs entities announced in December last year, are misdirected and will be vigorously defended,” a Goldman Sachs spokesman said by email.

The penalties announced today reflect “the severity of the scheme to defraud and fraudulent misappropriation of billions in bond proceeds, the lengthy period over which the offenses were planned and executed,” as well as the breadth of Goldman Sachs units and officers involved in arranging the 1MDB bonds, Thomas said in the statement.

Prime Minister Mahathir Mohamad has prioritized recouping funds believed to be lost through the troubled state fund, including seeking about $6.5 billion compensation from Goldman Sachs for its involvement in 1MDB. The premier said the bank had offered 1 billion ringgit ($239 million), which he said was “little” compared with the “huge killing” that the bank made from the bond deals.

Former senior Goldman Sachs banker Tim Leissner has pleaded guilty to conspiring to launder money and violating the U.S. Foreign Corrupt Practices Act by paying bribes to Malaysia and Abu Dhabi officials and circumventing Goldman’s internal accounting controls.

“Certain members of the former Malaysian government and 1MDB lied to Goldman Sachs, outside counsel and others about the use of proceeds from these transactions,” the Wall Street firm also said Friday. “1MDB, whose CEO and board reported directly to the prime minister at the time, also provided written assurances to Goldman Sachs for each transaction that no intermediaries were involved. Under the Malaysian legal process, the firm and the individual entity directors were not afforded an opportunity to be heard prior to the filing of these charges.”

Here are some of the 17 current or former staff at three Goldman entities charged by Malaysia:
- Staff who worked at London-based Goldman Sachs International, which holds the firm’s international business:

  • Richard Gnodde, 59, chief executive officer of GSI
  • Michael Sherwood, 54, former co-head of GSI with Gnodde; he’s currently on the board of London-based fintech Revolut
  • Brian Griffiths, a former policy adviser to Margaret Thatcher and now a Conservative member of the U.K.’s House of Lords
  • Robin Vince, now Goldman Sachs’s chief risk officer
  • Claes Dahlback


- At Goldman Sachs Asia:

  • John Michael "Mike" Evans, now of Alibaba. “We are aware of the news and will continue to monitor the situation,” the Chinese e-commerce giant said in a statement
  • Richard Campbell-Breeden, former vice-chair of the Asia-Pacific unit excluding Japan, who retired in 2016
  • Oliver Bolitho
  • Frederick Towfigh
  • Archie Parnell, who retired from Goldman and became a U.S. political candidate
  • Keith Hayes
  • Amol Naik
  • Dimitrios Kavvathas

- At Goldman Sachs Singapore:

  • Goh Boon Leng
  • Liow Chang Lee

(Published by Bloomberg, August 9 2019)
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