Federal prosecutors filed criminal charges on Thursday against a Malaysian financier and two former Goldman Sachs investment bankers who helped raise money for a Malaysian government investment fund from which about US$4-billion disappeared.
The charges against the former Goldman bankers, Tim Leissner and Roger Ng, were announced by federal prosecutors in Brooklyn. Also charged was Jho Low, the Malaysian financier whom prosecutors have depicted as being a mastermind of a scheme to misappropriate money from the Malaysian sovereign wealth fund.
Mr. Leissner pleaded guilty to conspiring to commit money laundering and to violating foreign anti-bribery laws. Mr. Ng faces similar charges. Mr. Ng was arrested on Thursday in Malaysia, authorities said. Mr. Low remained at large.
The filing of criminal charges in the matter was a rare move against senior executives of a major U.S. bank in the decade since the financial crisis. The charges could put pressure on Goldman – the primary bond underwriter for the fund at the centre of the case, 1Malaysia Development Berhad, or 1MDB – to reach a potential settlement with the federal authorities.
The charges could also have wider repercussions within the bank. Mr. Leissner, the charging documents said, arranged to pay bribes and kickbacks to officials in Malaysia and Abu Dhabi with either the help or knowledge of several unnamed conspirators, one of whom was identified as “an Italian national who was employed as a participating managing director” at Goldman.
The authorities contend that the bribes and kickbacks were paid to secure 1MDB’s bond underwriting business for the bank. The unidentified co-conspirator agreed with Mr. Leissner not to tell anyone in Goldman’s compliance department about the bribes, according to court documents.
The unidentified co-conspirator is Andrea Vella, according to two people familiar with the matter who spoke on the condition of anonymity because they were not authorized to speak publicly.
Until two weeks ago, Mr. Vella was Goldman’s co-head of investment banking in Asia. At that point, according to a Reuters report, Mr. Vella and his co-head were replaced by another veteran Goldman banker.
The alleged misappropriation of billions of dollars from the 1MDB fund has become the focus of an international scandal reaching from Malaysia to the United States to Hong Kong.
Until recently, the investigation had mainly focused on allegations that Mr. Low misappropriated billions of dollars from the 1MDB fund. Federal prosecutors in Los Angeles have filed multiple civil lawsuits to recoup assets bought with some of that money.
Prosecutors in the United States and elsewhere believe that a group of people with close ties to former Malaysian prime minister Najib Razak stole from the fund to buy paintings, yachts, real estate and even investment stakes in movies such as The Wolf of Wall Street.
Some of those allegations were described in civil forfeiture complaints filed by federal prosecutors in Los Angeles last year. Prosecutors from the Justice Department’s money-laundering and asset-recovery division also played an active role in the foreign bribery investigation.
The investigation rocked Malaysian politics earlier this year, leading voters to oust Mr. Najib. The new Prime Minister, Mahathir Mohamad, has moved quickly to investigate the alleged theft of billions of dollars from the investment fund, which was created under Mr. Najib. The Malaysian government is seeking restitution from Goldman, according to the country’s new Finance Minister.
Goldman provided an array of services to the fund, including helping it sell billions of dollars in bonds to investors, earning about US$600-million in fees for its work. The authorities have examined what role, if any, the firm played in the 1MDB fraud, whether it knew about the alleged fraud and whether it should have done more to uncover the misappropriation of funds.
Goldman has repeatedly played down its role in the scandal, saying it was unaware of how money from the fund was being used. The firm has said it was co-operating with the investigation.
Goldman did not immediately have a comment Thursday. A lawyer for Mr. Leissner could not be reached for comment. A representative for Mr. Low did not have an immediate comment.
Mr. Leissner, who worked closely with the Malaysian fund, had been in plea talks with federal prosecutor for some time. Mr. Ng reported to Mr. Leissner at Goldman. It was not known who was representing Mr. Ng.
Both Mr. Leissner and Mr. Ng left the bank more than a year ago.