7 Jun 2016
The Wall Street Journal has today fleshed out Sarawak Report’s own deduction, made last year, that the RM2.6 billion, which flowed into Najib’s AmBank account just before the GE13 election, came from the hurried US$3 billion bond issue, raised by Goldman Sachs to supposedly fund 1MDB’s vaunted ‘Strategic Partnership’ with Abu Dhabi’s Aabar fund.
Regulators have now established that the money was sent directly by Goldman Sachs to the small, private BSI Bank in Singapore, which in turn funded a Bangkok-based offshore investment outfit called Devonshire Funds, which then passed US$210 million to the BVI registered Tanore Finance Corporation, the company which then famously sent US$681 million into Najib Razak’s personal AmBank account in KL.
It all happened in the course of one week, just before Najib called the election.
So, will we receive a comment from the Prime Minister on this major development, which confirms what most Malaysians have strongly suspected for over a year?
Najib first denied that original payment, Malaysians will recall, and said he would sue Sarawak Report and the Wall Street Journal, who reported it. He then backed down and and claimed was ‘donated’ by an anonymous ‘Saudi Royal’.
Yet, he has made no comment on later revelations by Sarawak Report and others that there had in fact been further huge payments into his account, bringing it to a total of over one billion dollars before the election. Is he struggling to come up with one?
Indeed, for the past many months Najib’s response to these devastating revelations has been merely to persecute and harass reporters and online media, like Sarawak Report – now proved to have been entirely correct in its reporting – and to charge and arrest any critics he can lay his hands on for made-up ‘crimes against democracy’ or trumped up terrorism allegations.
This blog remains blocked and banned in Malaysia, for the crime of reporting the truth and there remains an arrest warrant out against the Editor in Malaysia. Moreover, the Malaysian Government continues (unsuccessfully) to request INTERPOL to place her on its terrorist ‘Red List’.
Despite the overwhelming evidence and blatant oppressive tactics, business cronies from the UK, for example, are continuing to lobby foreign politicians claiming there is yet ‘no proof’ against Najib and calling on Malaysia’s international partners to continue to do business with him and support him.
Apparently, they are comfortable to wait until such time as he decides to allow his hand-picked Attorney General to charge him and the courts he has under his control in Malaysia to convict him!
Governments such as the UK and US ought to cease to listen to these self-serving business circles and take note of the findings of the international regulatory authorities, because it is their duty to support the law and the Malaysian nation and not certain individual criminals, who have seized control of the country.
Fine for Goldman?
At the centre of the outrageous money transfers are two banks. BSI, which has already been closed in Singapore and now Goldman Sachs International, whose Asia boss Tim Leissner has been sacked.
As early as 2013 Sarawak Report queried GSI’s role in 1MDB’s bond issues and we highlighted the questionable closeness between Leissner and Najib and Taib also, for whom he also has raised bonds.
WSJ says that regulators have noted that the lawyer on the 2013 bond deal, Linklaters’ Kevin Wong, had queried Goldman’s decision to send all the money raised in a sovereign deal to a tiny private bank in Singapore. Why didn’t Goldmans flag up the suspicious transaction?
There were other even more suspicious aspects to this deal, which screamed out red alerts and ought to have triggered a banking warning over such vast sums of money.
Goldman had made such a vast profit from the deal, purely because 1MDB/Najib had indicated they needed the money to be raised in such a hurry. In order to produce the US$3 billion in a week Goldman had taken the entire bond out itself and then sold it on to clients later, taking the risk on its own shoulders and making a handsome profit of US$300 million in charges.
But, Goldman ought to have queried the hurry. The money was supposed to be being raised for a development project, the Tun Razak Exchange, which would have by no means have needed immediate funds. Indeed, over half of the money was instantly parked, according to 1MDB’s own accounts, in off-shore funds, allegedly because it wasn’t needed immediately after all.
The Tun Ranzak Exchange, of course, remains unbuilt.
The bankers involved cannot have failed to have realised that the money was plainly being raised for some other more urgent purpose, which circumstances make plain was to provide a war chest for Najib’s election campaign.
Their excuse so far, according to the reports, has been that because they were dealing with a government body and so assumed it was not corrupt. At the same time they are also putting forward the conflicting excuse that it is impossible to do business in corrupt countries like Malaysia, unless they are prepared to turn a blind eye to the regulations that govern their business elsewhere – ie the laws under which they are licensed to operate.
In short, banks like Goldman Sachs and BSI achieved their ranking as top operators in Malaysia by being willing to knowingly facilitate the proceeds of corruption – in other words they have assumed the role of master fences in major crime.
If a jeweller agrees to regularly receive and sell on proceeds from burglaries and robberies, then he is also labelled a fence and can face serious charges and a prison sentence. So why, many will ask, do banks who process far greater sums from far worse crimes, involving in this case billions stolen from the public, expect to get off with an excuse or a fine?
Goldmans and its staff made vastly more than any ordinary fence, but as they negotiate now with their regulators they doubtless hope that they will get away with a fine, which they can pass on to their customers – doubly fleecing the victims, who are the public, in the process.
Harder measures are needed. See the WSJ article in full below:
Goldman Probed Over Malaysia Fund 1MDB
Focus is on whether bank didn’t alert authorities to unusual funds movement
U.S. investigators are trying to determine whether Goldman Sachs Group Inc.broke the law when it didn’t sound an alarm about a suspicious transaction in Malaysia, people familiar with the investigation said.
At issue is $3 billion Goldman raised via a bond issue for Malaysian state investment fund 1Malaysia Development Bhd., or 1MDB. Days after Goldman sent the proceeds into a Swiss bank account controlled by the fund, half of the money disappeared offshore, with some later ending up in the prime minister’s bank account, according to people familiar with the matter and bank-transfer information viewed by The Wall Street Journal.
The cash was supposed to fund a major real-estate project in the nation’s capital that was intended to boost the country’s economy.
U.S. law-enforcement officials have sought to schedule interviews with Goldman executives, people familiar with the matter said. Goldman hasn’t been accused of wrongdoing. The bank says it had no way of knowing how 1MDB would use the money it raised.
Investigators are focusing on whether the bank failed to comply with the U.S. Bank Secrecy Act, which requires financial institutions to report suspicious transactions to regulators. The law has been used against banks for failing to report money laundering in Mexico and ignoring red flags about the operations of Ponzi scheme operator Bernard Madoff.
The investigators believe the bank may have had reason to suspect the money it raised wasn’t being used for its intended purpose, according to people familiar with the probe.
One red flag, they believe, is that Goldman wired the $3 billion in proceeds to a Singapore branch of a small Swiss private bank instead of to a large global bank, as would be typical for a transfer of that size, the people said.
Another is the timing of the bond sale and why it was rushed. The deal took place in March 2013, two months after Malaysia’s prime minister, Najib Razak, approached Goldman Sachs bankers during the annual meeting of the World Economic Forum in Davos, Switzerland. And it occurred two months before voting in a tough election campaign for Mr. Najib, who used some of the cash from his personal bank account on election spending, the Journal has reported, citing bank-transfer information and people familiar with the matter.
Mr. Najib and Malaysia’s attorney general say the money the prime minister received in his personal accounts was a legal political donation from Saudi Arabia and most was returned.
The fund says proceeds from the bond offering were moved offshore, because they weren’t needed immediately. The fund denies sending money to Mr. Najib and says it is cooperating with probes. In January, Malaysia’s attorney general cleared the prime minister of any wrongdoing.
Goldman had deep ties with 1MDB and Malaysia. Its top regional banker at the time, Tim Leissner, was present at a meeting to launch a predecessor of the fund in 2009 and Goldman later made hundreds of millions of dollars underwriting three bond deals worth a total of $6.5 billion and advising on two acquisitions for 1MDB.
Over that same period, Goldman also underwrote bonds for an important province in Malaysia and worked on IPOs for a Malaysian port operator and a major hospital operator.
Goldman has said it did proper due diligence on 1MDB. But several current and former Goldman executives said in interviews soon after the bond deal that because this was a government-owned fund run by the prime minister, the bank could largely rely on their word that the money was being used as intended. The executives also said that corruption was common in many developing markets and the bank couldn’t do business there without interacting with people and organizations that were potentially corrupt.
The 1MDB fund is the focus of probes into alleged corruption in at least seven countries. Investigators believe more than $6 billion of 1MDB’s money is unaccounted for. Mr. Najib and his family used hundreds of millions of dollars originating with the fund on the election campaign, to buy real estate, clothing and jewelry, as well as to help finance a Hollywood film, according to people familiar with the matter and bank-transfer information.
The episode involving Goldman and 1MDB comes at a time when regulators are closely watching banks’ behavior and cracking down on money laundering.
Later, though, 1MDB claimed Goldman overcharged it and sought a partial refund. Mr. Leissner took the request to his Goldman colleagues, who rejected it, people familiar with the matter said. Mr. Leissner resigned from Goldman earlier this year after bank investigators found he allegedly violated company policies by sending an unauthorized reference letter to another financial firm on behalf of a person involved with 1MDB.
One question investigators are asking is why 1MDB needed the cash so quickly for a property-development project that would take years to complete. Investigators also are looking into questions raised by Goldman’s lawyer on the deal, Kevin Wong, a Singapore-based partner with Linklaters, who sent a note to Goldman bankers alerting them to the fact the money was to be sent to a private bank, according to a person familiar with the matter.
Goldman checked the credentials of the bank, Switzerland’s BSI SA, and found no reason not to send money there, the person added. Mr. Wong declined to comment. A BSI spokeswoman didn’t respond to a request for comment.
From BSI, half the $3 billion bond issue was funneled into offshore investment funds because it wasn’t needed immediately, 1MDB said.
Some of the money ended up in Devonshire Funds, run by a Bangkok-based financial firm, according to bank-transfer information reviewed by the Journal. Devonshire in turn sent $210 million to Tanore Finance, a now-defunct British Virgin Islands shell company. An employee of Devonshire declined to comment.
Tanore also received other money that originated with 1MDB, according to investigators and bank-transfer documents.
In March 2013—the same month Goldman had sold the $3 billion bond—Tanore transferred $681 million into Mr. Najib’s private bank account, according to investigative documents.
The U.S. Bank Secrecy Act was used against HSBC Holdings PLC, which agreed to pay $1.9 billion in late 2012 to settle charges involving money laundering in the U.S. and Mexico. In its settlement, HSBC admitted to violating the Bank Secrecy Act and other laws designed to prohibit money laundering.
The law was also used in the Madoff case by prosecutors examining why J.P. Morgan Chase & Co. didn’t alert regulators about Mr. Madoff’s activities despite red flags. J.P. Morgan settled the Madoff case to head off a criminal case. The bank didn’t admit to any criminal liability, but did agree to a statement of facts that highlighted the red flags its employees missed. The bank agreed to pay $2.6 billion in 2014 to settle the case.