Dirty money

German ex-Goldman partner reportedly in plea deal over Malaysian scandal

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Forgery partnerships is more like it. Source: Reuters

A report that former Goldman Sachs partner Tim Leissner, a German national, is willing to cooperate with US investigators in exchange for a lesser charge has increased scrutiny on the New York investment bank and its alleged role in a huge Malaysian financial scandal.

Investigations into the misappropriation of up to $4.5 billion (€3.8 billion) from the state-run fund 1Malaysia Development Berhad, or 1MDB, have been stepped up since May’s surprise election victory of ex-prime minister Mahathir Mohamad over Najib Razak, his successor. Mr. Najib was arrested last week and charged with breach of trust. He pleaded not guilty and denied any wrongdoing.

A Swiss connection involving Mr. Leissner has also come to light. The former Goldman executive for Southeast Asia has not yet been charged with anything, although he was suspended from the bank in 2016 and subsequently quit.

Star banker graduated from German university

The Wall Street Journal first reported Mr. Leissner’s talks with US prosecutors, saying he may plead guilty to violation of a US ban on bribing foreign officials if he cooperated in the probe of 1MDB and Goldman. The latter earned $600 million for underwriting bond issues of $6.5 billion on behalf of 1MDB in 2012 and 2013, but has denied any wrongdoing and says it is fully cooperating with authorities.

In a separate report last month, Bloomberg described a 2012 lunch meeting between Mr. Leissner and several executives from the Swiss bank BSI. Subsequently, some $1.4 billion from the two 2012 bond issues were diverted to a BSI account.

Mr. Leissner, a graduate of the University of Siegen in Germany, was a star at Goldman thanks to his success in landing the 1MDB bond issues. If he does get a plea deal, he could shed light on where the money went and how much the higher-ups at Goldman knew. The bank’s cut for underwriting the bonds seems unusually high, though Goldman contends it was fair reward for the risks.

On Tuesday, Swiss prosecutor Michael Lauber met with his Malaysian counterparts over his country’s investigation of BSI, which is now part of private banking group EFG International. Under Mr. Najib’s government, Swiss officials were blocked from investigating the BSI role. Swiss authorities in 2016 ordered BSI to disgorge 95 million Swiss francs of profit from money laundering in connection with the Malaysian scandal. BSI appealed  the fine, citing “flawed” actions by Switzerland’s financial regulator.

Mathias Peer covers Southeast Asia for Handelsblatt. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the author: peer@upbangkok.com.

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