Goldman ex-exec in 1MDB case says bank's culture of secrecy helped hide facts

Colleagues helped him conceal bribes used to get business, he says in unsealed court papers

NEW YORK • Goldman Sachs' former top banker in Asia says the culture of secrecy at the investment bank led him to conceal wrongdoing from the company's compliance staff.

Now, Tim Leissner is in a position to help prosecutors peel back the curtain.

In his guilty plea, which was unsealed last Friday, Leissner said others at the bank helped him conceal bribes used to retain business in Malaysia, suggesting he has more to offer prosecutors.

Leissner's Aug 28 statement to the judge may give prosecutors more leverage to go after the bank, and other executives, for their roles in raising US$6.5 billion (S$9 billion) for Malaysian fund 1Malaysia Development Berhad (1MDB).

Prosecutors say more than US$4 billion was siphoned off by friends and family of the nation's then prime minister Najib Razak, among others.

"I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs," Leissner said.

Mr Michael DuVally, a spokesman for Goldman, did not have an immediate comment. The bank has said it believed proceeds of debt sales it underwrote were for development projects and that Leissner withheld information from the firm.

CONCEALED FACTS

I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs, for the benefit of Goldman Sachs and myself.

FORMER GOLDMAN SACHS BANKER TIM LEISSNER, in his guilty plea.

In his plea, Leissner acknowledged lying to compliance officials at Goldman about the role in the fund played by Low Taek Jho, better known as Jho Low, the alleged mastermind of the fraud.

"I knew that concealing Jho Low's involvement as an intermediary was contrary to Goldman Sachs' stated internal policies and procedures," he said.

"I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs, for the benefit of Goldman Sachs and myself."

Goldman has been under scrutiny for years over its role in raising money for 1MDB and for the fees it earned - about US$600 million.

1MDB is at the centre of a global scandal involving claims of embezzlement and money laundering, which have triggered investigations in the US, Singapore, Switzerland and beyond, and helped drive Malaysia's former leader from power.

In 2015, after the scandal spilled into public view, Goldman began investigating Leissner and eventually suspended him. He left the following year.

Goldman's lawyers scoured Leissner's records and provided evidence to prosecutors that he deceived them, not only in lying about his management of the Malaysian fund-raising, but in other unrelated matters, people familiar with the matter have said.

Charges against Leissner, Low and Goldman banker Roger Ng were unsealed in the US this month. Leissner had pleaded guilty to conspiring to launder money and violating the Foreign Corrupt Practices Act at the August hearing. He is free on US$20 million bail.

Leissner told the judge he took part in the money laundering, bribery and kickbacks from 2009 to 2014 in an effort to acquire and execute the "strategic" 1MDB transaction to benefit himself and Goldman. He said the goal was to influence Malaysian officials so that Goldman would get 1MDB's business.

In early 2016, shortly after the first public reports of wrongdoing at 1MDB, Goldman said it discovered that Leissner had written a letter of recommendation for Low - falsely claiming, the bank says, that Goldman had done due diligence on Low's family wealth and approved him as a client with no regulatory concerns.

In fact, Goldman had rejected Low as a private wealth management client on several occasions.

According to federal filings, Low was closely involved in helping Goldman Sachs win the Malaysian business even as Leissner and others were already working to shield his role from its compliance group.

BLOOMBERG

A version of this article appeared in the print edition of The Sunday Times on November 11, 2018, with the headline 'Goldman ex-exec in 1MDB case says bank's culture of secrecy helped hide facts'. Print Edition | Subscribe