Current Affairs

How the 1MDB Scandal Led to Goldman’s First Criminal Charges

Source: https://www.bloomberg.com/graphics/2018-malaysia-1mdb/?srnd=premium-asia
 
Goldman Sachs Group Inc. is facing its first criminal charges involving bond sales that it arranged for Malaysia’s state investment company 1MDB. The scandal surrounding the fund has reached around the globe to result in dozens of charges against politicians, bankers and financial institutions, as well as investigations in at least 10 countries.
 
1MDB was supposed to finance development in Malaysia, which is now seeking to recover $4.5 billion allegedly siphoned from the fund. Here’s a snapshot at the legal proceedings and probes:
 
MALAYSIA
Probes
  • Criminal Charges Against Goldman
    Malaysia has filed criminal charges against Goldman Sachs units, as well as former employees Tim Leissner and Roger Ng, for alleged false statements involving $6.5 billion of 1MDB bond sales that the bank arranged. Goldman calls the charges “misdirected” and will “vigorously defend” against them. READ MORE
  • Najib’s Corruption Charges
    Malaysia has slapped former Prime Minister Najib Razak with dozens of corruption and money laundering charges linked to 1MDB and its former unit SRC International. His wife and his lawyer are also facing relatted charges. They have all pleaded not guilty. READ MORE
  • Fugitive Jho Low
    Malaysia has charged fugitive financier Jho Low in his absence with allegations of receiving more than $1 billion from 1MDB. The country is seeking to sell a yacht he once owned at a minimum price of $130 million. READ MORE
  • Ex-1MDB Chief Indicted
    Former 1MDB President Arul Kanda has been charged with abetting Najib in tampering with a state audit report to remove Jho Low’s attendance at a 1MDB board meeting, among other changes. Other former 1MDB employees have also been indicted in absentia. READ MORE
  • Central Bank Land Sale
    The central bank is looking into a purchase of land from 1MDB. It has slapped a fine of an undisclosed amount on 1MDB after it found inaccurate disclosures by the fund when seeking approvals for investments abroad. It also proposed criminal proceedings against the fund, calls that were dismissed by the then-attorney general. READ MORE
  • Pipeline Projects With China
    Finance Minister Lim Guan Eng has suspended energy pipeline projects linked to a unit of China National Petroleum Corp. and a company he calls an “offshoot” of 1MDB. Malaysia’s anti-graft agency has raided offices for documents as part of the investigation. READ MORE
  • Deloitte’s Audit Probed
    1MDB’s new management is probing the testimony given by Deloitte’s former Malaysia chief when he defended an audit of the troubled state fund’s financial accounts to the Malaysian parliament. READ MORE
Investigating Agencies
  • Attorney General’s Chambers of Malaysia
  • Auditor General of Malaysia
  • Bank Negara Malaysia (central bank)
  • Public Accounts Committee
  • Malaysian Anti-Corruption Commission
  • Police
SINGAPORE
Probes
  • Deutsche Bank’s Role
    Singapore authorities are looking at the role of former Deutsche Bank executive Tan Boon-Kee and the extent of her involvement with the 1MDB account. She hasn’t been accused of any wrongdoing. READ MORE
  • Singapore’s Goldman Probe
    Singapore is said to have expanded a criminal probe into fund flows linked to 1MDB to include Goldman Sachs, which arranged bond sales for the fund. Authorities are trying to determine whether some of the roughly $600 million the bank earned from raising funds for 1MDB had flowed to its Singapore unit. READ MORE
  • Singapore Steps Up Meetings
    Singapore is the first country to have indicted and hailed bankers in the 1MDB scandal. It has stepped up meetings with Malaysian investigators, with Malaysia hiring Singapore-based law firm Tan Rajah & Cheah to help recover assets lost through 1MDB. READ MORE
  • Singapore Fines UBS, Credit Suisse
    Singapore has ordered Swiss private banks BSI and Falcon to shut, and fined large lenders including Credit Suisse, UBS and DBS as part of cases linked to 1MDB. The city-state has also seized assets and banned at least eight people from the financial industry, including ex-Goldman Sachs banker Tim Leissner. READ MORE
  • Jho Low’s Role in !MDB
    Singapore described Jho Low as a central figure in 1MDB, with prosecutors saying about $1 billion that the state fund was supposed to invest in a joint venture with PetroSaudi International was diverted to an account beneficially held by Low. Low has consistently denied wrongdoing.READ MORE
Investigating Agencies
  • Monetary Authority of Singapore
  • Commercial Affairs Department / Suspicious Transaction Reporting Office
  • Singapore Attorney General’s Chambers
SWITZERLAND
Probes
  • Swiss Sees 1MDB Used in Ponzi Scheme
    Switzerland’s top prosecutor says 1MDB was used as a Ponzi scheme to pay bribes and enrich themselves, with about $7 billion flowing from the state fund and its former unit SRC. Six people are being investigated for their involvement and two Swiss banks are under suspicion. READ MORE
  • Rothschild Seriously Broke Rules
    The Swiss Financial Market Supervisory Authority (Finma) said Rothschild Bank and one of its units have seriously breached money-laundering rules in the 1MDB case, stopping short of imposing a fine. READ MORE
  • Swiss Fines Coutts, Warns JPMorgan
    Switzerland has fined Coutts & Co. for violating money-laundering rules and illegally profiting from transactions associated with 1MDB. In December, Finma said JPMorgan breached regulations in its dealings with the Malaysian fund. READ MORE
  • The Emirates Connection
    The Swiss attorney general suspects money paid by 1MDB that was intended for an Abu Dhabi sovereign wealth fund benefited others, particularly two U.A.E. public officials that the Swiss are investigating for fraud, and a company related to the film industry. READ MORE
Investigating Agencies
  • Attorney General of Switzerland
  • Swiss Financial Market Supervisory Authority FINMA
UNITED KINGDOM
Probes
  • Challenge to IPIC Agreement
    Malaysia has filed a challenge to a $5 billion arbitration deal with Abu Dhabi’s International Petroleum Investment Co. to recover the amount it has paid and relieve the country of any obligation to pay the remainder. READ MORE
  • U.K. Calls for Thorough Probe
    A U.K. lawmaker tabled a motion in 2017 to debate the 1MDB scandal is parliament and called for a thorough investigation in the country. In June, Malaysia’s de facto opposition leader Anwar Ibrahim said the U.K.’s then-Foreign Secretary Boris Johnson will support 1MDB investigation and repatriation of assets. READ MORE
Investigating Agencies
  • Serious Fraud Office
UNITED STATES
Probes
  • Leissner’s Guilty Plea
    Former Goldman Sachs executive Tim Leissner has pleaded guilty to the U.S. Justice Department for conspiring to launder money and pay bribes to Malaysian and Abu Dhabi officials. The U.S. also charged the bank’s former employee Roger Ng, who was arrested in Malaysia. READ MORE
  • Jho Low Wanted
    The U.S. has charged financier Jho Low in absentia, accusing him of conspiring with a Goldman banker to launder billions of dollars embezzled from 1MDB. The U.S. has frozen and seized some of his assets, including a yacht that was found in Indonesian waters and the Park Lane hotel in New York City. READ MORE
  • Trump’s Fundraiser Implicated
    A Justice Department official pleaded guilty to lying to banks about the source of $74 million funneled into the country to pay for a lobbying effort to influence the 1MDB probe. Elliott Broidy, a fundraiser for U.S. President Donald Trump’s election campaign, engaged in contract negotiations to represent Jho Low, according to emails that his lawyer said were stolen when Broidy’s accounts were hacked. The emails included talking points on why the U.S. should drop its 1MDB probe. It’s unclear what if anything came of the proposal.  READ MORE
Investigating Agencies
  • FBI
  • U.S. Department of Justice
AUSTRALIA
Probes
  • Australia Bans Avestra Directors
    Australia banned two former executives of Avestra Asset Management from the financial industry for 10 years over corporate mismanagement. Court documents show Avestra is linked to Cayman Islands-based Bridge Global. 1MDB invested $2.3 billion of funds via the Bridge Global Absolute Return Fund SPC. READ MORE
Investigating Agencies
  • Australian Securities & Investments Commission
HONG KONG
Probes
  • Report: Hong Kong Bank Accounts
    In September, Hong Kong police said they were looking into deposits allegedly linked to Najib, a claim denied by the Malaysian government, according to the Financial Times. There has been no updates to the case. READ MORE
Investigating Agencies
  • Police
THAILAND
Probes
  • Whistleblower Xavier Justo
    The former employee of PetroSaudi, a company that was linked to 1MDB, is said to have stolen e-mails from his former employer and used the correspondence to extort money. Xavier Justo was sentenced to three years jail in August 2015. Thai police say the case is now closed. READ MORE
Investigating Agencies
  • Police
LUXEMBOURG
Probes
  • “Concrete Clues” of Embezzlement
    Prosecutors in Luxembourg blocked $100 million in 2016 when they found “concrete clues” of embezzlement from companies owned by 1MDB via accounts in Singapore, Switzerland, and Luxembourg. READ MORE
Investigating Agencies
  • District Tribunal of Luxembourg
UNITED ARAB EMIRATES
Probes
  • Report: Former Abu Dhabi Fund Execs Investigated
    Two former executives of an Abu Dhabi wealth fund, which had dealings with 1MDB, were issued travel bans, The Wall Street Journalreported. They also had their personal assets frozen by the U.A.E. central bank amid embezzlement allegations. The central bank did not respond to an e-mail seeking comment. READ MORE
Investigating Agencies
  • Unnamed Regulators

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