It all started, at least in terms of public recognition, with a giant spending spree that reads like a billionaire’s Christmas wish list.
The Women of Algiers by Picasso for 179 million dollars; $100 million to fund Martin Scorsese’s The Wolf of Wall Street production budget and a $600,000 Oscar statuette awarded to Marlon Brando for best actor in On the Waterfront – a gift for film star Leonardo DiCaprio . But it didn’t stop there: there was also a custom-built megayacht; a hotel in Beverly Hills; a $415 million stake in EMI’s music publishing; and a transparent grand piano.
The money came from 1MDB, a Malaysian sovereign wealth fund linked to then Malaysian Prime Minister Najib Razak, who was looted of $4.4 billion then 34 years old. Bass Taek Jhoknown as Jho Low.
Najib has himself been accused of receiving $681 million from 1MDB – a claim he has denied – while Low, subject to an Interpol red alert and believed to be in China, cut a deal to return $1 billion to the United States. Kleptocracy Asset Recovery Initiative. Low said the settlement was “a successful and satisfying outcome.”
The astonishing 1MDB scam has now reached federal court in Brooklyn in one of the most notable cases to hit New York’s court system in years. It’s all there: Hollywood, corruption, some of the biggest names in art, business and politics, and huge sums of money.
According to prosecutors, Low, and two bankers from Goldman Sachs, the most prestigious of American investment banks who reported $21.64 billion net profit last year conspired to pay $1 billion in bribes to Malaysian and Abu Dhabi government officials to win $6.5 billion in bond issues at Goldman.
In the past two weeks, former Goldman Sachs star banker Tim Leissner, 50, testified against a former Goldman Malaysia chief, Roger Ng, 49, who pleaded not guilty to launder billions of dollars diverted from the fund, officially known as 1Malaysia Development Berhad.
Sixteen months ago Goldman pleaded guilty to criminal charge and paid $5 billion in fines for his role in the fraud which Ng’s own lawyers, in attempting to pin the blame on Low, called it “perhaps the biggest heist in the world.” ‘history of the world’.
The trial produced some startling moments, including Leissner’s claim that Low claimed to have a “dialogue” in Beijing with Jared Kushner, Trump’s son-in-law and senior White House adviser, and other members of Trump’s inner circle. Trump to close the 1MDB requests.
Someone familiar with Kushner’s schedule told Bloomberg Kushner had never met or spoken to Low during his time in the White House. But a great Republican fundraiser had done it. In 2020, Elliott Broidy pleaded guilty to unlawfully lobbying the administration on Low’s behalf for $6 million – with another $100 million to come if the case was dropped.
But the case raised eyebrows for other reasons.
Leissner, once one of Goldman’s top executives who paid $43.7 million in fines as part of his pleahad his credibility challenged on the stand by Ng’s lawyers, who claimed he was married to two different women when he married Kimora Lee Simmons, the model, reality TV star and creator of Baby Phat, in 2014.
On the stand, the German-born former chairman of Goldman’s Southeast Asia division confirmed that in the early 2000s, when he was in the process of filing for a quick divorce from his first wife unbeknownst to her, he had married a colleague of Goldman.
“Tim Leissner uses people,” Ng’s defense attorney Marc Agnifilo told jurors last month. He was “married to two different women at the same time, twice” and had an “illicit” relationship with another, Agnifilo said in his opening statements.
“I lied a lot, sir, and I regretted those choices,” Leissner said in cross-examination this week.
Last week, Ng’s lawyers asked trial judge Margo Brodie to allow evidence that Simmons, the hip-hop mogul’s ex-wife Russell Simmons, helped Leissner launder at least $80 million stolen from 1MDB. Simmons is the registered owner of shell companies in the Seychelles, Delaware and California used by Leissner to launder money obtained from a “Kuwaiti sheikh”, Ng’s lawyers claimed in court documents.
Simmons’ attorneys said their client did nothing wrong – and that communications between Simmons and Leissner were protected by marital privilege laws. But Ng’s lawyers said the privilege did not apply since her ex-husband admitted to forging divorce papers to marry her.
But the stunning details of the case and the distractions of luxury lifestyles on display throughout the 1MDB saga obscure what may be the government’s central focus. According to sources close to Leissner, the government is seeking to personalize corporate crime. After the stock market crash of 2008, which saw the destruction of Lehman Brothers, Bear Stearns and UK lender Northern Rock, there were no lawsuits against executives who exposed irresponsible lending policies.
Instead, taxpayers picked up the bailouts and – subject to tougher balance sheet requirements – the banking system moved on.
But a 2015 memo from then-U.S. Deputy Attorney General Sally Yates statement of new guidelines. “A company acts only through individuals, investigating the conduct of individuals is the best and most efficient way to determine the facts and extent of any corporate wrongdoing,” wrote Yates.
Note was updated in 2020 with a set of principleswho argued that individual accountability “deters future illegal activity, incentivizes changes in corporate behavior, ensures that the appropriate parties are held accountable for their actions, and promotes public confidence in our legal system”.
This instruction, in broad terms, explains recent challenges to an immunity agreement entered into by certain members of the Sackler family in the Purdue Pharma bankruptcy action; FBI raids on two houses – one in Washington and one in New York – connected to sanctioned Russian oligarch Oleg Deripaska in October last year; and efforts to turn the Trump Organization’s chief financial officer, Allen Weisselberg, against his boss, the former US president.
“Companies are fictions – they act only because people in positions of authority cause the company to act in a way that results in criminal conduct by the company,” said Rick Mountcastle, assistant attorney general. of Virginia, who led the investigation and prosecution of Purdue Pharma and three executives.
“There’s not a lot of deterrent effect to suing a company. The company gets fined, it’s a cost of doing business, and there’s no incentive for that company or others to change their conduct. It is therefore good policy to penalize corporations for their criminal behavior, but also to detain individuals for causing or allowing it to occur.
But the 1MDB conspiracy charge in Brooklyn poses a number of unanswered questions.
Charles Elson, director of the Center for Corporate Governance at the University of Delaware, said the prosecution effort involved in Ng’s lawsuit could suggest the government is looking to “catch a bigger fish” than either the defendant or Leissner. .
“Usually the pursuit of lower level individuals is not the ultimate goal. They’re usually looking for people in the organization who created a culture that allowed that to happen or who may have sanctioned that,” Elson said.
Ng’s lawyers argue that their client is a scapegoat for “company-wide” failures at Goldman that enabled the fraud. In its settlement with prosecutors, the bank sought to recover or withhold more than $100 million in executive compensation from former chief executive Lloyd Blankfein and cut current CEO David Solomon’s 2020 salary package a third to $10 million.
Perhaps the big question is how the scandal affects Goldman’s reputation. The bank has been trying to stay out of the spotlight ever since Blankfein made an inappropriate remark about “doing God’s work” and American journalist Matt Taibbi described it as “a big vampire squid wrapped around the face of humanity, relentlessly blocking its blood funnel”. in anything that smacks of money.
In court last week, attorneys for the government and Goldman were carefully monitoring the proceedings. “It’s politically popular, because financial companies never engender big love from the public,” Elson said, “and it sends the message that no one is above of the law. Other companies, less connected, should certainly be concerned.