Goldman Sachs star Tim Leissner ends 2 year 1MDB saga with bank getting $2 billion punch in the face

Former Goldman Sachs superstar trader Tim Leissner has left a trail of destruction behind him, including bans, massive fines and criminal proceedings. Now, his former employer has had to settle another huge penalty with the US Department of Justice

Goldman Sachs has struck a deal with the US Department of Justice to pay more than $2bn (£1.54bn) over its role in the Malaysian 1MDB fund, according to a report.

The agreement will let Goldman Sachs dodge a criminal conviction, Bloomberg reported. The news outlet said the fine may be announced within days.

Goldman Sachs and the Department of Justice have both been contacted for comment by many mainstream news sources this morning, to no avail.

This massive fine for one of the worlds largest investment banks and Tier 1 FX dealers is the latest in a stream of government-issued penalties which have ensued as a result of Tim Leissner’s ill-fated 1MDB fund which went awry.

Earlier this year, the Malaysian government reached an agreement in principle with the Government of Malaysia to resolve all the criminal and regulatory proceedings in Malaysia involving the firm, including pending criminal proceedings against subsidiaries of Goldman Sachs and certain of their current and former directors, relating to 1Malaysia Development Berhad (1MDB).

The agreement in principle comprised the payment to the Government of Malaysia of $2.5 billion and a guarantee that the Government of Malaysia receives at least $1.4 billion in proceeds from assets related to 1MDB seized by governmental authorities around the world.

In connection with the guarantee, Goldman Sachs performed valuation analysis on the relevant assets and believes based on that analysis that the guarantee does not present a significant risk exposure to the firm. In addition, the Government of Malaysia agreed to withdraw the pending criminal charges and agreed that no further charges would be brought against Goldman Sachs, its subsidiaries, or any of their directors, officers and employees (excluding former employees Tim Leissner and Roger Ng) related to 1MDB.

In 2018, the whole saga came to a head, as Goldman Sachs senior executive Tim Leissner was banned in Singapore for life from operating any securities related business, signalling the end of the road for one of the firm’s most influential figures of the previous 16 years.

Mr Leissner, who has already pleaded guilty in the US to crimes in connection to 1MDB, was in 2017 banned for 10 years by the Monetary Authority of Singapore. That penalty was increased by the authority this week.

Rather oddly, last month, Mr Leissner placed the blame on the corporate culture that exists and is so strong within Goldman Sachs for his actions, and had given prosecutors the impression that he may now be able to be used as an instrument to lift the lid on an overtly aggressive methodology that he says exists within Goldman Sachs.

Goldman Sachs’s former top banker in Asia says the culture of secrecy at the investment bank led him to conceal wrongdoing from the company’s compliance staff. In his guilty plea, which was unsealed in early November, Mr Leissner said others at the bank helped him conceal bribes used to retain business in Malaysia, suggesting he has more to offer prosecutors.

The heavily redacted transcript doesn’t indicate whether he is cooperating with authorities. But the judge warned him that under federal sentencing guidelines he faces decades in prison. Providing useful information to prosecutors might help Leissner get a more lenient sentence.

Mr Leissner’s Aug. 28 statement to the judge may give prosecutors more leverage to go after the bank, and other executives, for their roles in raising $6.5 billion for the Malaysian fund, 1MDB. Prosecutors say more than $4 billion was siphoned off by friends and family of the nation’s prime minister, among others. “I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs,” he said.

The Monetary Authority of Singapore has stated that the scope of the prohibition order against the former Goldman Sachs employee had also been broadened to stop him becoming a substantial shareholder or a capital markets services licensee.

The move came two days after Malaysian prosecutors said they had filed criminal charges against Goldman Sachs, Mr Leissner and another former Goldman Sachs employee, Roger Ng Chong Hwa, for their role in the alleged embezzlement of billions of dollars from 1MDB.

The bank said it disputed the allegations and would defend itself.

The prime minister of Malaysia had a message for the crowd at the Grand Hyatt San Francisco in September 2013. “We cannot have an egalitarian society – it’s impossible to have an egalitarian society,” Najib Razak said at the time, however he added “Certainly we can achieve a more equitable society.”

Tim Leissner

Mr Leissner enjoyed the festivities that night with model Kimora Lee Simmons, who’s now his wife.

In snapshots she posted to Twitter, she’s sitting next to Najib’s wife, and then standing between him and Mr Leissner. Everyone smiled but soon it went awry. At least US$681 million landed in the prime minister’s personal bank accounts that year, money his government has said was a gift from the Saudi royal family and the windfall triggered turmoil for him, investigations into the state fund he oversees and trouble for Goldman Sachs, which helped it raise US$6.5 billion, resulting in Mr Leissner, the firm’s Southeast Asia chairman at the time leaving the company when questions about the fund, his work on an Indonesian mining deal and an allegedly inaccurate reference letter arose.

Mr Leissner, who joined Goldman Sachs in 1998 and very quickly networked in the right circles in the APAC region, worked tirelessly and got the best deals done, soon became head of the entire region.

Mr Leissner, whose father was a Volkswagen AG executive in Yugoslavia during the Bosnian War before stints in Mexico and China, graduated from Germany’s University of Siegen and got an MBA from the University of Hartford in Connecticut in 1992. At a 2001 gathering of young Asian leaders, the program listed him as Dr Leissner for his workshop “What would happen had Einstein joined Wall Street?”

A biography he provided at another forum said he got a doctorate in business administration from Somerset University. A school with that name offered degrees for US$995, a retired federal investigator told a US congressional committee on education in 2004, unleashing investigations into bogus certificates.

Mr Leissner’s contacts were more impressive. In May 2006, he was sitting onstage when the conglomerate controlled by billionaire Syed Mokhtar Al-Bukhary announced its takeover of power producer Malakoff Bhd, what it called “the largest acquisition ever undertaken in Malaysia.”

Goldman Sachs was an adviser on the deal. That year, Mr Leissner made partner. The firm helped manage billionaire T Ananda Krishnan’s 2009 initial public offering of Maxis Bhd, Malaysia’s biggest wireless operator. Mr Krishnan also controlled Astro Malaysia Holdings Bhd, the largest pay-TV broadcaster, and Goldman Sachs was there when it went public, too.

Mr Leissner was open about his ambition. The firm wanted to do more business in Malaysia, he said in an interview carried by a government news agency in Asia. That was before Mr Najib became prime minister in 2009. By the end of that year, the nation’s securities commission cited the new leader’s “strategic shift” when it announced that Goldman’s application to start operations for fund management and corporate finance was approved.

That smoothed the way for the firm’s blockbuster deals with 1MDB, which began as an investment fund set up by oil-rich Terengganu state before Mr Najib took it over as a development fund.

Mr Leissner’s contacts are massive and influential in Malaysia and Singapore, which is why a ban in that particular region is particularly significant to his future prospects.

Read this next

Metaverse Gaming NFT

Despite crypto winter, Fastex grabs $23.2 million in Fasttoken token sale

Fasttoken, part of the Fastex web3 ecosystem, has secured $23.2 million in financing through the private and public token sales of its native cryptocurrency Fasttoken (FTN).

Digital Assets

Iran to repay Russian debts in gold-backed stablecoins

A high-ranking member of the Russian parliament confirmed reports that his country was in talks with Iran to create a stablecoin for foreign trade settlements, to replace the dollar, ruble and Iranian rial.

Digital Assets

SEC denies Cathie Wood’s bitcoin ETF for second time

The approval of a regulated crypto derivative is still looking far less likely, as the US regulators have once again denied Cathie Wood’s application for a long-awaited spot bitcoin exchange-traded fund (ETF).

Executive Moves

Pavel Spirin promoted to Scope Markets CEO following Rostro acquisition

Belize-based FX and CFDs brokerage Scope Markets has promoted Pavel Spirin to take on an expanded role as the company’s chief executive officer. He replaces the outgoing CEO Jacob Plattner, who has also been a major shareholder since he resigned his position as managing director at GKFX.

Retail FX

Public.com goes all-in on alternative investing, launches Rare Sneaker Portfolio

“The concept of curated Portfolios means that our members will be able to invest in categories like art, trading cards, royalties, and real estate without needing to become subject matter experts on individual assets.”

Industry News

State Street taps AWS and Microsoft for cloud and infrastructure solutions

“By standardizing and simplifying our technology operating model, we will be able to more quickly deploy client environments and launch new products and services, while continuing to enhance the resiliency of our technology environment and our business operations.”

Institutional FX

Bitpanda launches Investment-as-a-Service business for banks, fintechs, online platforms

“Financial institutions today have to ask themselves how they aim to cater the increasing demand for modern investing solutions. Building these Individually, means a high startup cost, and products that are often outdated before they are even launched.”

Institutional FX

Options expands market data feeds after partnership with Tools for Brokers

“Our integration with ACTIV Financial marked the beginning of a new era in market data availability and infrastructure. Our teams have come together to provide unparalleled, fully managed market data services alongside Options’ global connectivity and infrastructure.”

Industry News

Recruitment in financial services sector buoyant despite planned mass layoffs

“It remains to be seen what impact this will have on hiring levels within the financial services arena this quarter”, said APSCo, regarding the expected mass layoffs within the financial services sector in England & Wales. 

<