Charges of conspiring to launder billions embezzled by Malaysia’s state development fund are first to be brought by US authorities

This article is more than 1 year old

This article is more than 1 year old

The US justice department has charged two former Goldman Sachs bankers and the Malaysian financier Jho Low with conspiring to launder billions of dollars embezzled from Malaysia’s state development fund.

The criminal charges are the first to be brought by US authorities over the vast, long-running scandal at 1Malaysia Development Berhad (1MDB). Prosecutors charge that Malaysian officials stole billions from the fund to buy property, art and other items including investments in movies such as The Wolf of Wall Street.

About $4bn disappeared from the fund and the claims of corruption led to Malaysia’s former prime minister, Najib Razak, being charged with corruption, charges he has denied.

The criminal indictment, unsealed in New York, also charged Jho Low and Ng Chong Hwa, a former Goldman Sachs banker also known as Roger Ng, with paying bribes to various Malaysian and Abu Dhabi officials.

In another court filing, Tim Leissner, 48, a former Goldman Sachs partner, pleaded guilty to conspiring to launder money and conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Abu Dhabi officials and circumventing internal accounting controls. Leissner has been ordered to forfeit $43.7m as a result of his crimes.

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Goldman Sachs has said it is fully cooperating with the investigation and that it had no knowledge of how the money from the fund was being used. Both Leissner and Ng left the bank over a year ago. The filing is likely to put pressure on the bank to reach a settlement with US authorities.

The bank did not immediately respond to a request for comment.

The whereabouts of Low remain a mystery. Since Najib was toppled in an election in May, he has disappeared, rumoured to be hiding in first Thailand, then Macau, Taiwan and now China. The Malaysian police have also issued a warrant for his arrest for his role in the 1MDB scandal.

According to the justice department, Low, Ng, Leissner and other conspirators regularly bribed government officials in order to maintain Goldman’s lucrative contracts with 1MDB.

The DoJ highlighted the alleged conspirators’ attempts to secure Goldman’s involvement in a share sale of 1MDB’s energy assets.

In an online chat between Low and Leissner in June 2014, Low and Leissner “discussed the need to ‘suck up to’ a 1MDB official and to send ‘cakes’ to a person believed to be the wife of Malaysian Official #1”, US authorities said in a statement. Malaysian Official Number #1 is widely believed to be Najib and his wife, Rosmah Mansor is among those who have now been charged with financial crimes relating to 1MDB, charges she also denies.

“A few months after this chat, a bank account owned and controlled by Leissner and his relative was used to transfer approximately $4.1 million to a high-end New York jeweler, in part, to pay for gold jewelry for the wife of Malaysian Official #1.”

The Malaysian government is currently seeking restitution from Goldman. The justice department’s kleptocracy asset recovery initiative has already filed civil charges aimed at seizing assets allegedly bought with embezzled 1MDB funds, including a $39m mansion in the Los Angeles hills and a $30m penthouse in Manhattan overlooking Central Park.