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US DoJ charges Jho Low, 2 ex Goldman Sachs investment bankers over 1MDB

KUALA LUMPUR — The United States Department of Justice (DoJ) has charged fugitive Malaysian financier Low Taek Jho and two former Goldman Sachs investment bankers over the 1Malaysia Development Bhd (1MDB) scandal.

The US Department of Justice has charged fugitive Malaysian financier Low Taek Jho and two former Goldman Sachs investment bankers over the 1MDB scandal.

The US Department of Justice has charged fugitive Malaysian financier Low Taek Jho and two former Goldman Sachs investment bankers over the 1MDB scandal.

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KUALA LUMPUR — The United States Department of Justice (DoJ) has charged fugitive Malaysian financier Low Taek Jho and two former Goldman Sachs investment bankers over the 1Malaysia Development Bhd (1MDB) scandal.

A DoJ statement said Low, better known as Jho Low, Roger Ng Chong Hwa and  Tim Leissner were charged in the federal court in the Eastern District of New York with conspiring to launder billions of dollars embezzled from 1MDB.

Low and Ng, were also charged with conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Abu Dhabi officials, the DoJ added.

“As part of (a) three-count indictment, Ng is also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a major New York-headquartered financial institution, which underwrote more than US$6 billion in bonds issued by 1MDB in three separate bond offerings in 2012 and 2013, while Ng was employed at the financial Institution as a managing director.

Ng was arrested on Thursday (Nov 1) in Malaysia, pursuant to a provisional arrest warrant issued at the request of the United States. Low remains at large.

Mr Low however maintained his innocence.

“As noted in the indictment today, Mr Low held no formal position at 1MDB, nor was he ever employed by Goldman Sachs, or the Governments of Malaysia or Abu Dhabi.

“Furthermore, the bond offerings detailed in the indictment were undertaken openly and lawfully between experienced, well-regulated financial institutions and government entities,” Mr Benjamin Haslem, co-CEO of the Wells Haslem Mayhew Strategic Public Affairs, said in the statement that was also posted on Low’s website.

“The US Department of Justice specifically states that the charges in the indictment are allegations, and that Mr Low is presumed innocent unless and until proven guilty. Mr Low simply asks that the public keep an open mind regarding this case until all of the evidence comes to light, which he believes will vindicate him,” it added.

Leissner meanwhile pleaded guilty and agreed to pay US$43.7 million (S$60.16 million) in restitution of ill-gotten gains.

As alleged in court filings, between approximately 2009 and 2014, as 1MDB raised money to fund its projects, billions of dollars were misappropriated and fraudulently diverted from 1MDB, including funds it raised in 2012 and 2013 through three bond transactions that it executed with Goldman Sachs.

As part of the scheme, Low, Ng, Leissner and others conspired to bribe government officials in Malaysia, including at 1MDB, and Abu Dhabi to obtain and retain lucrative business for Goldman Sachs, including the 2012 and 2013 bond deals.

They also allegedly conspired to launder the proceeds of their criminal conduct through the US financial system by purchasing, among other things, luxury residential real estate in New York City and elsewhere, and artwork from a New York-based auction house, and by funding major Hollywood films.

As alleged, Low’s close relationships with high-ranking government officials in Malaysia and Abu Dhabi were central to the scheme, including the as yet still unnamed Malaysian Official #1 (MO1).

According to allegations in court filings, beginning in approximately 2009 and continuing through 2014, Low, Ng, Leissner and the other co-conspirators used Low’s relationships to obtain and retain business for Goldman Sachs through the promise and payment of hundreds of millions of dollars in bribes, including to ensure 1MDB awarded the financial Institution a role on three bond transactions known internally at the Financial Institution as “Project Magnolia,” “Project Maximus” and “Project Catalyze.”

“As a result of its work for 1MDB during that time, (Goldman Sachs) allegedly received approximately US$600 million in fees and revenues along with increased reputational prestige. At the same time, Ng, Leissner and others allegedly received large bonuses and enhanced their own reputations at the financial Institution.

“In total, according to allegations in court filings, more than US$2.7 billion was misappropriated from 1MDB and Low, Ng, Leissner and others conspired to launder this money through the US financial system to pay bribes to foreign officials and for the personal benefit of themselves and their relatives.”

In early 2012, following a series of meetings in Malaysia and the United Kingdom, the trio and co-conspirators agreed that, with the assistance of Goldman Sachs, 1MDB would issue US$1.75 billion in bonds guaranteed by an entity wholly owned and controlled by the government of Abu Dhabi, under Project Magnolia.

Low allegedly explained to Ng, Leissner and others at the time that, to complete the transaction, bribes would need to be paid to officials in Malaysia and Abu Dhabi and hundreds of millions of dollars were actually paid to officials in these countries, according to court filings.

In or around March 2012, 1MDB allegedly selected (Goldman Sachs) to be the sole bookrunner and arranger for Project Magnolia. As part of the scheme, Low and other co-conspirators enlisted the assistance of 1MDB officials, promising to pay them bribes and kickbacks.

After Project Magnolia closed on or about May 21, 2012, more than US$500 million of the bond proceeds were misappropriated and diverted from 1MDB through numerous wire transfers to bank accounts in the name of shell companies beneficially owned and controlled by Low, Leissner, Ng and other co-conspirators, including a high-level official at the Abu Dhabi entity that guaranteed the Project Magnolia bonds and a close relative of MO1.

The DoJ statement then said the bond proceeds were transferred to MO1’s close relative and later used by the relative’s US-based motion picture company in the production of hit Hollywood movie “The Wolf of Wall Street”.

According to court filings, from May 2012 and throughout 2013, the trio and their co-conspirators continued to work to ensure that Goldman Sachs obtained and retained additional 1MDB business, including the bond transactions known as “Project Maximus” and “Project Catalyze”.

The trio and their co-conspirators then used the transactions to “further their criminal scheme”, and laundered hundreds of millions of dollars of diverted funds into their accounts.

The trio also caused millions of dollars “to be transferred to accounts of 1MDB officials or relatives of such officials in exchange for their assistance in obtaining and retaining business” for Goldman Sachs.

Over US$35 million of the bond proceeds was also allegedly used by a co-conspirator to help acquire a condominium in New York (City), the documents showed.Similarly, according to allegations in court filings, after Project Catalyze closed in March 2013, more than US$1 billion of diverted funds, traceable to the transaction, were laundered, at Low’s direction, to bank accounts in the name of entities beneficially owned and controlled by Low, Leissner and others, including 1MDB officials.

The statement said the financial institution continued to seek business from 1MDB after Project Catalyze.

“For example, as alleged, 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 (MO1).

“A few months after this chat, a bank account owned and controlled by Leissner and his relative was used to transfer approximately US$4.1 million to a high-end New York jeweller, in part, to pay for gold jewellery for the wife of (MO1).” AGENCIES

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