A significant factor in the 1MDB scandal was how the bond offerings were allegedly used to loot the Malaysian sovereign wealth fund for personal gain. Two of these bond offerings, which were underwritten by Goldman Sachs, raised almost $6 billion dollars, much of which was purloined by individuals who routed proceeds from the offerings to their personal back accounts. Goldman has consistently argued it did nothing wrong in connection with this work.
Now the former head of Goldman Sachs southeast Asia, partner in the firm and lead contact with 1MDB, Tim Leissner, is reportedly in discussions with the Justice Department and will plead guilty to federal charges and cooperate with prosecutors. It is not clear what charges might be brought against Leissner, but one would guess Foreign Corrupt Practices Act charges for bribery and corruption will be high among them.
Leissner worked on the account from 2009 until he was suspended by the firm in 2016 for writing a letter on firm letterhead to a Luxemburg bank acknowledging that Goldman Sachs had run due diligence on one of the alleged principles of the corruption, Jho Low, and that the due diligence found nothing untoward about Low. Leissner did not have authority to make this representation on behalf of the firm, and he voluntarily resigned shortly after the letter became public.
Goldman Sachs has repeatedly denied all wrongdoing and stated: “Since we suspended Mr. Leissner, we have discovered that certain activities he undertook were deliberately hidden from the firm, which we brought to the attention of the authorities.” As a partner in the firm, however, Leissner’s actions may well be held attributable to the organization. Regardless, any plea agreement and corruption by Leissner would certainly bring authorities much closer to unraveling the sordid 1 MDB corruption scandal.