SINGAPORE – Singaporean prosecutors and police are examining Goldman Sachs Group’s relationship with the Malaysian state investment fund at the centre of global money laundering probes, people with knowledge of the matter said.
The Commercial Affairs Department, the police’s economic crime unit and prosecutors have interviewed current and former Goldman Sachs executives who worked on bond offerings from 1Malaysia Development Bhd, said the people, who asked not to be named because the queries are confidential. Investigators are also looking into the firm’s links with Malaysian financier Low Taek Jho, who the US has alleged controlled a plot to siphon billions of dollars from the bond proceeds, the people said.
Investigators’ meetings with current and former Goldman Sachs employees are part of a criminal probe into fund flows related to 1MDB, the people said. The bank itself isn’t the focus of the investigation, they said. Neither Goldman Sachs nor its current or former employees have been publicly accused of criminal offenses or charged in relation to the fund, whose dealings have sparked probes in Singapore, Switzerland and the US
The interviews, which took place as recently as October, add to the scrutiny the New York-based bank faces over its role in raising almost US$6 billion for 1MDB in 2012 and 2013. The money was meant for development projects but US prosecutors allege that the bulk of it was diverted by high-level 1MDB officials and their associates.
Investigators in Singapore have asked for details about specific meetings involving Goldman Sachs officials concerning the bond deals, the people said. They’ve also quizzed the current and former bank employees about the nature of the firm’s relationship with Low, and whether he was considered a client, according to the people.
“We are unable to comment because investigations are ongoing,” a spokeswoman at the Singapore Attorney-General’s Chambers said in response to questions. A Goldman Sachs spokesman declined to comment.
But Goldman Sachs’s ties with 1MDB have already ensnared one former senior executive. Tim Leissner, the former chairman of Southeast Asia who was the lead banker to the fund, has been barred from the financial industries in Singapore and the US. He left Goldman Sachs in February 2016.
In the US, investigators have asked about Leissner’s interactions with Roger Ng, a former Goldman colleague who worked on the 1MDB funding, according to a source, Bloomberg reported in April. Ng, a Malaysian national, was head of Goldman’s Southeast Asian sales and trading business at the time of his resignation in April 2014. At the time, Goldman declined to provide a reason for his departure.
The 1MDB bonds were arranged and underwritten by Goldman Sachs International, the bank’s London-based unit. Both 1MDB and Malaysian Prime Minister Najib Razak, who formerly chaired its advisory board, have consistently denied any wrongdoing.
It’s not clear whether Singapore’s investigation will result in any charges, and if so, against whom. Goldman Sachs’s work with 1MDB has also drawn scrutiny from US authorities, including the Justice Department and New York’s banking regulator.
Goldman Sachs earned some US$593 million in fees and commissions for arranging the 1MDB bond deals – a sum that drew scrutiny from Malaysian politicians. Investigators in Singapore have asked the current and former employees about the fees the bank received, as well as if any fees were due to the Abu Dhabi government-owned fund International Petroleum Investment Co. for guaranteeing two of the bonds, the people said.
Goldman Sachs has previously said the Malaysia fees represented its underwriting risks and market conditions at the time.
Representatives for 1MDB and IPIC didn’t immediately respond to requests for comment. Three calls to Low’s Hong Kong-based Jynwel Capital weren’t answered. Low said through a representative in July that no wrongdoing has been proven in any jurisdiction on the alleged misappropriation of 1MDB funds. While IPIC has verified the guarantees it made on the 1MDB bonds, it denied ownership of a company known as Aabar BVI, to which 1MDB said it sent $3.5 billion.
US investigators alleged in a July 2016 lawsuit that the offering circulars of the bonds contained material misrepresentations and omissions, including how the proceeds would be used and whether any officials from 1MDB and IPIC, and their associates, would personally benefit. The prospectus for one of the bonds said the proceeds could be used for general corporate purposes.
The Monetary Authority of Singapore in March barred Leissner from its securities industry for 10 years, saying he issued an unauthorized reference letter on behalf of Low to a financial institution and made false statements on behalf of Goldman Sachs without the bank’s knowledge. In September, the US’s Financial Industry Regulatory Authority indefinitely barred Leissner for failing to provide documents related to the letter.
The meetings being examined by Singapore investigators include one in early 2012 about the bond offerings that was attended by Leissner, Low and officials from Swiss private bank BSI, said the people. Also in focus was a presentation that took place that year that led to IPIC agreeing to guarantee one of the bonds, dubbed Project Magnolia, and indirectly vouch for another, known as Project Maximus, one of the people said.
A representative for Leissner didn’t reply to a request for comment. Leissner’s lawyer Marc Harris said in December that his client looked forward to responding to the MAS about the allegations against him.
About US$1.4 billion from the bond proceeds were diverted to a bank account at BSI in Switzerland over several months in 2012, according to US court filings. The Swiss bank has seen three of its former employees receive jail terms in Singapore on charges linked to the 1MDB probe, and its local branch was shut down by the city’s authorities.
Luciano Crobu, a spokesman at EFG International AG, which acquired BSI in 2016, declined to comment.
The MAS wrapped up a two-year regulatory review of banks involved in 1MDB fund flows in May, and vowed to intensify its supervision of the financial industry after the city’s image was dented by the scandal. The regulator has fined some of the world’s biggest banks over lapses related to 1MDB.
The US Justice Department in August asked a judge to put on hold more than a dozen civil forfeiture lawsuits seeking at least US$1 billion in assets, while the Federal Bureau of Investigation said possible witnesses related to 1MDB are too scared to talk for fear of retaliation. Switzerland’s financial regulator said in April that it’s still probing three private banks over their roles with 1MDB. – Bloomberg