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FBI, DOJ Probe Goldman On Malaysia Prime Minister's Slush Fund
Back in August, we brought you the story of 1MDB, the Malaysian development bank turned-Najib slush fund with deep ties to Goldman. We’ll recount the history of the fund here not only because it’s key to understand what’s taking place now, but because it quite frankly is quite amusing. Here’s how we summed it up two months ago in the wake of street protests calling for the prime minister's ouster in connection with an investigation into the fund:
1MDB was set up by Najib six years ago and has been the subject of intense scrutiny for borrowing $11 billion to fund questionable acquisitions. $6.5 billion of that debt came from three bond deals underwritten by Goldman, whose Southeast Asia chairman Tim Leissner is married to hip hop mogul Russell Simmons’ ex-wife Kimora Lee who, in turn, is good friends with Najib’s controversial wife Rosmah Manso.
You really cannot make this stuff up.
What Goldman did, apparently, is arrange for three private placements, one for $3 billion and two for $1.75 billion each back in 2013 and 2012, respectively. Goldman bought the bonds for its own book at 90 cents on the dollar with plans to sell them later at a profit (more here from FT). Somewhere in all of this, $700 million allegedly landed in Najib’s bank account and the going theory is that 1MDB is simply a slush fund.
So you can see why some folks are upset, especially considering Rosmah has a habit of having, how shall we say, rich people problems, like being gouged $400 for a home visit by a personal hairstylist.
In the nearly two months since, WSJ has kept the heat up, penning a series of articles that dive deep into the rabbit hole.
In one instance, the UAE went looking for a $1.4 billion collateral payment a subsidiary of an Abu Dhabi wealth fund supposedly received from 1MDB and couldn't find it. This same subsidiary - whose manager was fired earlier this year - guaranteed $2.3 billion in mystery money that 1MDB claimed was parked in the Cayman Islands in order to secure a sign-off from Deloitte after KPMG was dismissed as 1MDB's auditor for asking too many questions. Subsequently, another $993 million turned up missing. Ultimately, the future of Najib's political career will likely depend on how it all shakes out especially considering the now contentious relationship between Najib and influential former PM Mahathir Mohamad.
Late last month, the FBI announced an investigation into the fund after Malaysia arrested a former official who was trying to fly to New York to urge US authorities to look into the whole debacle.
Now, as WSJ reports, the FBI and DOJ are looking into Goldman's role. Here's more:
Goldman Sachs Group Inc.’s role as adviser to a politically connected Malaysia development fund resulted in years of lucrative business. It also brought exposure to an expanding scandal.
As part of a broad probe into allegations of money laundering and corruption, investigators at the Federal Bureau of Investigation and the Justice Department have begun examining Goldman Sachs’s role in a series of transactions at 1Malaysia Development Bhd., people familiar with the matter said.
A few years before the Malaysia deals, Goldman did a series of controversial transactions with the Libyan Investment Authority that also brought unwelcome attention. The Libyan sovereign-wealth fund claimed in a lawsuit filed in 2014 in London that the bank took advantage of its unsophisticated executives to sell them complicated and ultimately money-losing investments. Goldman has said the claims are without merit. A trial in the suit is scheduled to begin next year.
The bank earned $350 million for executing nine trades for Libya, according to the investment authority. It earned far more from the Malaysian fund. The bank was consulted during 1MDB’s inception, advised it on three acquisitions and arranged the sale of $6.5 billion in bonds that alone brought in close to $600 million in fees, according to people close to the bank.
Malaysia was an early area of success for Goldman, which had strong relationships in the country. Tim Leissner, Goldman’s top banker in Southeast Asia who was close to Mr. Najib, according to people familiar with the matter, and Roger Ng, a Malaysian sales executive who has since left the bank, did deals for the government and companies throughout the last decade.
In 2009, when the sultan of the state of Terengganu, also Malaysia’s king at the time, was launching a fund to invest its oil wealth, Mr. Leissner was called to the royal palace to pitch the king for the business, according to people close to the bank. Goldman won the bidding to advise the fund, which would soon be taken over by the national government and named 1Malaysia Development Bhd.
Enter Andrea Vella. The same Andrea Vella who made some $350 million for Goldman convincing Muammar Qaddafi to sink $1.2 billion of Libya's sovereign wealth fund into derivatives deals that eventually went bust in the wake of the crisis. Back to the Journal:
A key arranger of the financing for 1MDB was Andrea Vella, an Italian-born senior Goldman banker, people familiar with the transactions said. He was also involved in structuring the Libyan deals, according to people familiar with the matter. This spring, Mr. Vella, 42 years old, was promoted to co-head of investment banking in Asia excluding Japan.
Vella apparently arranged the financing described at the outset wherein Goldman simply underwrote bond deals, bought the bonds for its own book at a discount, and then presumably sold them later, pocketing the difference.
In Malaysia, one of Goldman’s big assignments came in 2012, when it advised 1MDB on the acquisition of Malaysian conglomerate Genting Bhd.’s domestic power-generation business. The deal quickly turned into a loser for 1MDB, which paid 2.3 billion ringgit for the business, about $740 million at the time.
In its financial statements for the year, 1MDB booked an impairment charge of 1.2 billion ringgit, writing down part of the premium for the power assets it had bought from Genting and another Malaysian company.
Goldman also helped 1MDB raise $1.75 billion in bonds to finance the deal with Genting. The Malaysian fund wanted to move quickly with the issuance and decided to do a private placement, instead of a public offering, people familiar with the matter said.
Mr. Vella, who had moved to Asia in 2010 to help build the bank’s debt and structured-finance business in the region, arranged to do the financing via Goldman’s Principal Funding and Investment desk, a group that uses the bank’s own money to provide financing to clients. Goldman essentially wrote a check to 1MDB, took the bonds onto its balance sheet, hedged and sold over time for a profit, these people said.
The bank did the same thing with a subsequent deal in which some $3 billion in debt was issued.
Pretty clearly, between everything described above, 1MDB was, from the beginning, a vehicle wherein anyone and everyone involved simply skimmed money off the top on the way to financing dubious transactions of questionable value.
While it's difficult to say if Goldman will ultimately be held accountable for its role, it is worth noting that the Libya fiasco involving Vella wound up in court. But perhaps the most important thing to remember here - as mentioned above - is that this could very well cost Najib his career (and his legacy) and while there's certainly plenty of domestic support for his ouster, the market hates uncertainty, and as we've seen in Brazil, political turmoil breeds jittery investors.
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Publicity stunt
Aha! They found the source of the terminal and deceased virus GOLDMAN SACHS...
Problem is that most of the patient is infected and beyond repair.
Goldman to Obozo, et al - what is this shit? what the fuck are we paying you for?
"While it's difficult to say if Goldman will ultimately be held accountable for its role," doing God's work.
I'll guess, no.
And... ?!?** POOF ** ?!?...just like that, a major source of pressure on MH17 takes a few steps backwards into the shadows...
Hey presto!
A settlement will be reached where Goldman admits to no wrongdoing and is punished with a stern fine of $1000.
Yes...but they'll still be permitted to 'Pass Go(y)'
Slush fund? Oh, you mean the slut fund....
...rich people problems, like being gouged $400 for a home visit by a personal hairstylist.
I'm betting the 'hairstylist's' bunghole was what was gouged.
They prefer taking the dirt road because they are filthy, psychotic, immoral back-door men and women.
$400 for a playboy bunny pussy shave, not to excessive.
Nothing will come of it. Goldman is above the law. A troika of MIC, Wall Street and spooks runs the land of the free. Goldman is official arm of this Deep State.
Speaking of Satan, someone is about to get the dubious comment number 6666666. Who will it be?
A holocaust survivor, likely.
They are also above the FED:
"A committee that includes senior Federal Reserve officials reviewed and overturned a bank examiner's finding that Goldman Sachs lacked a firm-wide policy to prevent conflicts of interest, according to a top Fed official."
The NCAA has tougher standards than the Federal Reserve. Of course football is much more important than the entire nations life blood, our money?
Rothschilds.
"Probe?"
Give me a break.
Goldman doing something corrupt? Say it isn't so. Quick, somebody slap their wrist and make them stop.
I'll play a wild hunch there will be zero consequences for the Squid as it was only doing God's work.
meanwhile, on this side of the pond, marvel at how the NY FED steepens the yield curve in the presence of horrendous economic data. now that's manipulation!
bingo
Really ??
Bankers + Politicians + Corruption.
Move along, nothing to see here.
And no consequences either.
So fucking what? Let me know when they are prosecuting, convicting, and EXECUTING!
They can do it or we can do it.
get long sharecropping and guillotines, beat the rush!
won't want to be a non-white at Goldman today. They seems to enjoy sacrificing the diverse employees.
I'm going to come out and just say it. The odds on a criminal case being bought against Goldman's with severe enough repercussions to at least make them think twice about committing the same level of illegal activity again is next to zero. In fact U.S justice against the Wall Street Banks have reached a level of Shakespearian tragedy, that prosecutors and the heads of regulatory bodies should face the same wrath as bankers when the system crashes.
It is now an irrefutable fact the law is complicit with Wall Street in the non-punishment of financial crimes and hence given a green light to the corruption and fraud of Goldman's et al, which in and of itself is an unforgivable act. Everybody on ZH would commit a financial crime if we knew we would not face prosecution. So blaming the banks is pointless and futile. The problem lies with those holding positions in the criminal justice system and regulatory bodies, as the corruption has clearly spread there and infected both institutions.
Zero is correct. GS OWNS anyone of importance in this "investigation".
Tim Leissner is married to hip hop mogul Russell Simmons’ ex-wife Kimora Lee"
Is it me...but marrying Russell Simmons handme down...that isn't all that good looking is ewwww.
She must be good at something.
that "something" was being a friend of the Prime Ministers wife and I am confident he was whoring out his wife to the PM as well, I mean it's Goldman afterall.
Just another vast anti God worker conspiracy.
booyaaaa
The businees of Amerika is business... no matter how corrupt it is.
I hope they interview Derek Zoolander as well.
Yes, the farce will be complete.
Project "Derelict"
Why did I read grope instead of probe?
Oh well am waiting for the day the system collapses
Then all GS Employees, present and formr, will be treated, like all those who were members of the Nazi Party. Complicit on all counts.
Sentenced to ..........
Hope the jury comprises of many of those whom they screwed
Pay another huge fine to the government,then lay off your employees.
As Blankfein repeatedly said in Hearing testimony regarding the financial crisis :
" We deal with SOPHISTICATED INVESTORS ".
Such as, I guess, the Libyan sovereign wealth fund who in their lawsuit claim Goldman took advantage of unsophisticated execs.
Don't worry.. Goldman Sachs (sock it to you) has hired Hillary Clinton for guidance on destroying any damning evidence... she has experience in this area.. especially when dealing with the FBI...
Stopped reading at "hip hop".
Bersih Malaysia.
Bersih USA.
I didn't know the "Fab" Tourre had Malaysian roots.
Wait, wait.
Where is MDB on this - happened at 1MDB.
No law is "enforced" without political will to enforce it. "Drunk driving" is heavily-enforced because of imense political will to enforce it. Violations of law by financial and medical industry are not enforced because the politicians don't insist upon it being enforced.
Its simple as this:
1) Satan America ,its euroPeon pirate followers & Ukraine conspired. Ukraine had old BUK missiles from Russia bought in past. All they needed was a civilian airplane. So they chose Malasian (another oil nation to hit for) . America & euroPeons gave green signal & a corridor to MH17 over the warzone. Ukraine fired BUK and hundreds died.And now since it was a Russian missile so Russia is to blame for.
2) Another Malasian flight MH370 came too near illegal American airforce base in Diego Garcia and it was shot down by Americans in fear of reprisal from Malaysians , as a guilt.
3) And now investigation by the conspirators & criminals (America & euroPeons) . The result will be this : Russia is responsible for the attack & Putin will be made accountable. Their judgement will be scripted by CabalA$$lickerLiarDemonicObama to Sanction Russia further, arrest Putin and his ministers bring them to ICC , put them in jail. While in the mean time change the govt. in Russia , break it apart and piece by piece give it to its cabal capitalists who will enjoy the Russian oil wealth.
4) Also a distraction for mid east where Israel , west & europe will go for a putsch
5) Net aim of west : Capture all oil wealth of the world
6) The 700 million dollar bribe paid by Goldman to Malaysians is for a) guilt of shooting 2 planes killing hundreds b) To change govt of oil nation malasia in order to capture its oil wealth