Singapore’s law enforcement authorities have extended their criminal probe against the Malaysian state investment fund 1Malaysia Development Berhad (1MDB) to include Goldman Sachs, according to a Bloomberg report.
Although the city-state’s authorities have been investigating Goldman Sachs’ involvement with the scandal-plagued Malaysian firm since 2017, now they are focusing on the firm’s local unit. The primary focus of the investigation is to see if Goldman’s Singapore subsidiary was involved in moving around $600 million acquired from the three controversial bond deal sales from 2012 to 2013.
The Scandal Explained
1MDB came under the limelight soon after its establishment in 2009, which was then chaired by the former Malaysian Prime Minister Najib Razak. Leaked financial documents surfaced that huge sums of money were borrowed via government bonds and siphoned into bank accounts in Switzerland, Singapore, and the US.
Moreover, days ahead of the 2013 Malaysian election a sum of $731 million turned up into Najib’s personal bank account. This fund was allegedly used to pay off politicians, the former prime minister’s credit card debts, and even paid the bills of his wife’s crazy shopping sprees.
Moreover, the Malaysian fund had allegedly sponsored the purchase of tens of millions of dollars worth of property in the US, a luxurious yacht, antique art pieces, and even paid off gambling debts for Malaysian businessman John Low.
Why Your Enterprise’s Finances Rely on Employee TrainingGo to article >>
Goldman Sachs’ Involvement
The New York-headquartered investment bank was one of the key advisors for the Malaysian fund, primarily for three multi-billion dollar bond deals that happened between 2012 and 2013. In 2012, Goldman advised 1MDB on the acquisitions of Tanjong Energy Holdings from Malaysian billionaire Ananda Krishnan, and domestic power plants from Genting Bhd.
The deals were financed by two separate bond offerings in 2012 worth $1.75 billion each. Months later, Goldman underwrote another $3 billion debt for 1MDB to raise capital for ‘new strategic economic initiatives’ with Abu Dhabi. Goldman reportedly received around $600 million for all of these deals.
In 2016, Singapore’s authorities have announced sanctions on Tim Leissner, Goldman Sachs’ former top dealmaker in Southeast Asia, for breaches in connection with the shady deals. Leissner even confessed in front of the US authorities for bribing officials to get the bond deals.
According to Bloomberg, Singaporean law enforcement has filed criminal charges against two former senior bankers of Goldman Sachs and is closely coordinating with its US counterparts.
In 2016, Singapore court had also convicted a former wealth manager at BSI bank for three charges of obstructing justice in relation with the same scandal.