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Fed bars 2 ex-Goldman executives in 1MDB scandal
THE Federal Reserve on Tuesday barred two former Goldman Sachs executives from working in the banking industry because of their roles in a multibillion-dollar fraud involving a Malaysian government investment fund.
One of the executives, Tim Leissner, who was one of Goldman's top investment bankers in Asia, has pleaded guilty in a federal criminal investigation of the fraud and has been ordered to forfeit about US$44 million. The other executive, Roger Ng, has been charged in the United States with participating in money laundering and bribery, but is in custody in Malaysia.
Goldman Sachs helped the fund, 1Malaysia Development Berhad, commonly known as 1MDB, sell more than US$6 billion of debt to investors, ostensibly for projects that would benefit the Malaysian people. But federal prosecutors contend that at least US$2.7 billion of that money went to fuel the lavish lifestyles of several people close to the former Malaysian prime minister, including flamboyant financier Jho Low.
Prosecutors have said some of the money raised for the fund went towards paying bribes to secure business for Goldman Sachs.
Low, who also has been charged in the United States and Malaysia, attended at least two meetings where Lloyd Blankfein, the former Goldman chief executive officer, was present. But Goldman Sachs has painted Tim Leissner, husband of fashion designer and model Kimora Lee Simmons, as a rogue operator who bears the responsibility for the bank's role in the scandal.
The bank has said that it took steps to make sure that neither Low nor any other intermediaries played a role in arranging the 1MDB financing deals.
"Given the Department of Justice's charges last year, this development is hardly surprising," said Jake Siewert, a Goldman spokesman.
Federal prosecutors and banking regulators have continued to investigate Goldman's role in the scandal. The bank has said it faced the prospect of a significant fine to resolve the matter.
In addition to permanently barring Leissner from the banking industry, the Fed fined him US$1.4 million. Banking authorities in Singapore barred Leissner from working in the country late last year.
A lawyer for Leissner, who consented to the Fed ban, declined to comment. He is free on bail, which was originally set at US$20 million. NYTIMES