Goldman bankers achieved ‘hero status’ for 1MDB work, says Leissner

Goldman Sachs bankers who worked on a series of lucrative bond deals at the center of the 1MDB scandal achieved “hero status” at the bank, according to testimony from a former executive who has pleaded guilty in connection with the case.

Tim Leissner estimated Goldman made close to $ 700mn from the 1MDB bond deals – about $ 100mn more than the figure previously given by prosecutors. The sum was “unprecedented” and “celebrated by Goldman Sachs as such”, he told the jury in Brooklyn federal court on Wednesday, as he focused on the bank’s culture to explain his actions.

The bankers who worked on the 1MDB bond deals received “hero status” within the bank, Leissner said, and their work was “highlighted at the highest level of Goldman Sachs many times”. Goldman did not immediately respond to a request for comment.

The testimony from Leissner, who has pleaded guilty to charges of conspiring to launder money and violate foreign bribery laws in connection with the 1MDB fraud, comes during the first week of the trial of former Goldman banker Roger Ng.

Ng has been charged by US authorities with conspiring to bribe officials and launder billions of dollars from the Malaysian state investment fund. He has pleaded not guilty.

Leissner, who was Ng’s former boss, worked with the defendant on the 1MDB deals. Leissner struck a co-operation agreement with the US government in the hope of receiving a more lenient sentence.

Prosecutors this week said Leissner’s testimony would provide an “inside view” into the 1MDB affair, which the U.S. Department of Justice says resulted in the misappropriation of $ 4.5bn from the Malaysian state investment fund. Authorities have alleged that those funds were spent on luxury property, jewelery and expensive art, among other things.

Leissner was deemed a star banker at Goldman and rose swiftly through its ranks. By 2002 he was made a managing director in Asia and in 2006 he joined the elite group of 500 or so partners. Former colleagues have said he was known as someone who brought in a lot of business for the bank.

Marc Agnifilo, Ng’s lawyer, in his opening statement earlier this week said that in making Leissner its star witness, the government was “giving. . . a pass ”to a“ flat-out immoral ”individual who ultimately ended up working for Jho Low, the Malaysian financier accused of masterminding the 1MDB fraud. Low remains at large and maintains his innocence.

In explaining why he originally sought out Low, Leissner told the jury that Low was involved in significant deals that Goldman could “not afford to lose”.

Establishing a relationship with Low “held promise”, and bankers at Goldman “are tasked to always find new business opportunities”, Leissner said.

It “seemed important” to build a relationship with someone like Low, who appeared to have connections to the Malaysian government and entities in the Middle East that could further business for the bank, Leissner added.

He said he “did not really care” about Low’s reportedly extravagant lifestyle, which had raised red flags internally at Goldman when the financier was put forward, and then rejected, as a private wealth client. “At the time, I wanted to get business for Goldman Sachs,” Leissner added.

Leissner’s lawyer declined to comment. Leissner said he and his family received between $ 50mn and $ 60mn in misappropriated 1MDB funds, $ 44mn of which he forfeited to the US.

The three 1MDB bond offerings that Goldman worked on raised roughly $ 6.5bn. Of that, the DoJ alleges more than $ 2.7bn was misappropriated by Low, Ng and others.

The government’s first witness at Ng’s trial, Andy Tai – a managing director at Goldman who worked with Leissner and Ng on the 1MDB bond deals – described Leissner as the more “insistent” of the pair in terms of tone. . .[and in] talking to people ”.

Ng and Leissner appeared on guest lists for extravagant celebrity-studded parties thrown by Low, according to testimony on Tuesday from Alex Cohen, chief financial officer at Strategic Group, which arranged lavish events for the Malaysian financier.

Guest lists for these events, which were produced as evidence in the trial, included celebrities Pharrell Williams, Kim Kardashian and Leonardo DiCaprio, although Cohen could not confirm if people on guest lists ultimately attended the parties, some of which cost more than $ 3mn.

The trial, which was delayed due to the Covid-19 pandemic, has renewed attention on a global, intercontinental scandal, with American officials labeling it “kleptocracy at its worst”. If convicted, Ng faces up to 30 years in prison.

Goldman has said it was led to by “certain members of the former Malaysian government and 1MDB”. It paid a record $ 2.9bn in a global settlement in 2020. Its Malaysian subsidiary pleaded guilty to a bribery charge. The bank also struck a settlement of up to $ 3.9bn with Malaysia over losses the south-east Asian country suffered from the scandal.

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