A top Goldman Sachs executive is in hot water, and the bank could be facing a congressional inquiry, following the discovery that $681 million tied to a state fund set up by Goldman made its way to the personal account of Malaysia’s prime minister.
Tim Leissner, Goldman’s regional chairman for Southeast Asia, has reportedly taken a leave of absence from Goldman and returned to the United States from Singapore as the FBI looks into the fund’s transactions. The fund, 1Malaysia Development Berhard (1MDB), was originally established in 2008 as the Terengganu Investment Authority, a sovereign wealth fund tasked with supporting economic development projects in the Malaysian state of Terengganu. In 2009, its mission expanded to support development projects throughout Malaysia and its name changed to 1MDB. Goldman reportedly helped establish the fund and was paid substantial, and above-market, commissions for its role in several of the fund’s bond sales.
According to reports, $681 million from the fund went to a personal account for the Malaysian prime minister, Najib Razak. It appears the money came from Saudi Arabia, and Razak has claimed the money was a gift to Malaysia from Saudi Arabia to assist in fighting terrorism, a claim that is apparently being met with skepticism. In addition to the FBI, French and British authorities are also reportedly looking into the fund’s activities amid allegations of money laundering and other irregularities.
Sources quoted in a New York Post story about the scandal noted that fraud and kickbacks are widespread and are essentially a cost of doing business in Malaysia and other countries in the region. One of the sources noted there may have been multiple “managers” receiving kickbacks from Goldman’s business in Malaysia. One expert quoted in the Post story speculates that Goldman may ultimately face a congressional inquiry over its involvement with 1MDB.
The post Goldman Sachs Banker Embroiled in Massive Overseas Money Scandal appeared first on Capital Markets Litigation.