Business News for April 8, 2022
A former Goldman Sachs banker was convicted Friday on bribery and money-laundering charges stemming from…
A former Goldman Sachs banker was convicted Friday on bribery and money-laundering charges stemming from a globe-spanning fraud scandal: the looting of more than $4 billion from a Malaysian sovereign wealth fund.
A federal jury found the former banker, Roger Ng, guilty after a nearly two-month trial in which the government’s key witness admitted to being a frequent liar. Even so, the jurors found Mr. Ng guilty of all three charges after more than two days of deliberation. He could face up to 30 years in prison.
Breon Peace, the U.S. attorney for the Eastern District of New York, said the scheme to pilfer the fund, known as 1MDB, was “massive in its scale” and “brazen in its execution.”
“Today’s verdict is a victory for not only the rule of law but also for the people of Malaysia, for whom the fund was supposed to help by raising money for projects to develop their country’s economy,” Mr. Peace said. “The defendant and his cronies saw 1MDB not as an entity to do good for the people of Malaysia but as a piggy bank to enrich themselves.”
No date has been set for sentencing. Mr. Ng’s lawyer, Marc Agnifilo, did not respond to messages seeking comment.
The trial, which began in mid-February in federal court in Brooklyn, is likely to be the only criminal trial in the United States to arise from the scandal. The stolen billions funded lavish lifestyles for powerful Malaysians — including the country’s former prime minister — and others, buying paintings by van Gogh and Monet, paying for luxury properties from London to Beverly Hills and helping finance the Hollywood movie “The Wolf of Wall Street.”
Jho Low, a big-spending Malaysian businessman and the architect of the scheme, was indicted along with Mr. Ng, but he is a fugitive and is believed to be living in China. Tim Leissner, a former Goldman partner and the government’s star witness during the trial, is scheduled to be sentenced in July; he pleaded guilty to bribery and money-laundering charges in 2018.
Mr. Low is accused of pocketing nearly $1 billion in diverted funds from a series of bond offerings that Goldman had arranged for the 1MDB fund. Mr. Leissner got more than $60 million in kickbacks, and prosecutors said Mr. Ng had received $35 million in illegal proceeds.
Federal prosecutors have said others — including the former prime minister, Najib Razak, and his family as well as officials in Abu Dhabi — had gotten hundreds of millions of dollars in bribes for approving Goldman as the main underwriter on the bond deals. Mr. Najib was ousted from power and later was convicted by a Malaysian court and sentenced to up to 12 years in jail. He has filed an appeal.
The trial was unusual almost from the start: The proceedings were delayed for several days because federal prosecutors were slow in turning over potentially critical documents to the defense, which Mr. Ng’s lawyers have said hampered their ability to prepare their case and could be grounds for an appeal.
It also featured testimony from a star witness who admitted being a prolific liar. Mr. Leissner, once a rising star at Goldman in Asia, was on the stand for 10 days, including six days of a blistering cross-examination. He was forced to admit to initially lying to federal agents, to his fellow partners at Goldman and to his girlfriends and wives.
The litany of lies that Mr. Leissner had to fess up to on the stand was long and in some cases unbelievable. He admitted to twice being married to two women at the same time. He said he had delivered a fake divorce decree to his current wife, the model and fashion designer Kimora Lee Simmons, when he was persuading her to marry him. (The couple, who have two children, are estranged.) And he said that while he was dating Ms. Simmons he communicated with her using a fake email account he had created in the name of his second wife, Judy Chan.
Mr. Leissner was also forced to acknowledge lying to investigators about his actions regarding 1MDB, and was grilled about earlier statements that conflicted with what he said on the stand. When pressed, Mr. Leissner admitted he “lied a lot.”
In his closing argument, Mr. Agnifilo told the jury that Mr. Leissner was “one of a kind” when it comes to lying and couldn’t be trusted to tell the truth on anything, including his involvement in the bribery and kickback scheme. But prosecutors said Mr. Leissner was telling the truth about the crimes Mr. Ng was charged with, including a $35 million payment that authorities said was an illegal kickback.
Mr. Ng’s wife, Hwee Bin Lim, testified that the $35 million that she and her husband had received was the proceeds from a $6 million investment she made many years earlier with Ms. Chan.
Early in the trial, Mr. Agnifilo told Judge Margo K. Brodie, the chief judge for the Eastern District of New York, that he was considering asking for a mistrial because of what he called “government misconduct” for not turning over tens of thousands of pages of Mr. Leissner’s emails until after the trial had started. Prosecutors called the delay “inexcusable” and blamed it on a separate legal team responsible for reviewing documents for potential legal privilege issues.
Mr. Agnifilo decided against asking for a mistrial, but legal experts have said the delays could be used to argue for a new trial on appeal.
The trial was an unusual example of a manager’s testifying against a subordinate. In high-profile corporate crime cases, key cooperating witnesses are often used to build cases against higher-up executives at a firm. But in Mr. Leissner’s case his cooperation was used by federal prosecutors to not only prove the charges against Mr. Ng but to build a criminal case against his former employer.
Mr. Leissner’s cooperation led Goldman Sachs’s Malaysia subsidiary to plead guilty to a single charge of violating the Foreign Corrupt Practices Act — the first instance of Goldman’s appearing before a U.S. judge and admitting it was guilty of a crime.
The bank agreed to pay $2.3 billion in fines to federal authorities and billions more to authorities in other countries, including Malaysia. The bank itself also entered into a three-year deferred prosecution agreement with U.S. authorities.
Mr. Ng’s trial did not shed much light on the actions of others at Goldman, but it did provide details about the strategies employed to conceal Mr. Low’s involvement in orchestrating the three bond deals. Those deals raised $6.5 billion for the fund and generated $600 million in fees for Goldman.
One of the three criminal charges that Mr. Ng was convicted on involved conspiring to violate controls and procedures at Goldman that are intended to deter the paying of bribes to foreign officials.
Prosecutors introduced evidence that Mr. Ng and Mr. Leissner frequently communicated on personal email accounts, rather than their work accounts. They also said the two men had deleted some emails after the scandal involving the 1MDB fund began to become public in Asia.
Mr. Leissner testified that he and Mr. Ng were willing to pay the bribes because they knew getting the bond deals was a big win for Goldman and they would look like “heroes” inside the bank.
As part of its plea deal, Goldman agreed to a statement of facts that outlined a number of internal control failings that authorities said should have detected the wrongdoing by its former employees, as well as Mr. Low’s involvement in putting the deals together.