IN the sordy world of global mega-business, the liner “wine, women and song” reflects the hedonistic pleasures and vices, specifically drinking alcohol, having or pursuing sex with women, and seeking general entertainment like singing or dancing.
Most times, it’s the nocturnal passport to fame and fortune and Tim Leissner, once the rising star at Goldman Sachs, who ransacked the 1MDB (Malaysia Development Berhad) state investment fund, had a reputation for exactly that.
Singapore regulators are so convinced of his notorious business dealings that they placed a lifetime ban on Leissner, who faces criminal charges in the United States and Malaysia.
The Monetary Authority of Singapore, or MAS, said it decided to lengthen its 10-year ban against Leissner after he pleaded guilty to charges levied by the Justice Department in November. Leissner admitted money laundering conspiracy and conspiring to violate foreign bribery laws in connection with 1MDB.
CONFLICT OF INTEREST
The Financial Times reported that there were at least two instances when Leissner’s liaisons seemed to have an alleged notorious business link. In one instance “Leissner was accused of having an affair with an executive at a Malaysian company the bank was advising. When confronted about the potential conflict of interest he denied the liaison, according to people familiar with the matter”.
There was also an alleged brief affair with the daughter of the late (Cabinet minister and diplomat) Tan Sri Jamaluddin Jarjis who died in a helicopter crash in 2015. Leissner allegedly arranged for her to intern at Goldman in 2010 “despite unease among some of his colleagues.”
She apparently told friends she believes Leissner “instigated the relationship to curry favour with Malaysia’s political elite”. One of these friends was quoted as saying: “She feels rotten that the only reason he showed interest was to get close to her father.”
The late Jamaluddin was close to former prime minister Datuk Seri Najib Razak, who is also facing nearly 40 charges in Malaysia over his role in 1MDB, abuse of power and corruption, among others.
Singapore’s outright ban covers banking and business functions and the managing of capital markets services firms. It also prevents Leissner from being a director, substantial shareholder, capital markets services licensee or exempt person for Singapore businesses dealing with securities, futures and funds management.
Leissner, who led Goldman Sachs’ Singapore branch, managed three 1MDB bond issuances from 2012 to 2013. MAS said he issued an unauthorised reference letter to a financial institution in Luxembourg, and falsely claimed the bank had conducted due diligence on fugitive Malaysian financier Low Taek Jho, also known as Jho Low.
FUGITIVE FINANCIER JHO LOW
Low, the named mastermind of a scheme that pilfered billions of dollars from the state-owned fund, remains at large. He allegedly used the money for bribes and kickbacks to foreign officials, to pay for luxury real estate, art and jewelry and to help finance Hollywood movies including “The Wolf of Wall Street.”
American and Malaysian authorities have charged Low in absentia, Leissner and another former Goldman Sachs executive, Roger Ng Chong Hwa.
Newly-installed Goldman Sachs chief executive David Solomon said that the bank was working with authorities to bring to justice the culprits behind the scandal that has roiled Malaysia. Goldman reportedly helped 1MDB to issue US$6.5 billion of bonds but Kuala Lumpur accuses the bank and its former employees of misappropriating US$2.7 billion during the process.
Malaysia this month filed criminal charges against Goldman Sachs and two of its former employees over the alleged theft of funds used to buy everything from yachts to artwork. The fraud that involved former Malaysian leader Najib Razak, contributed to the last government’s shock defeat at May elections.
Solomon said he was limited on how much to share on the ongoing probe, but defended the bank’s role in the scandal, which he said had “outraged” him.
“While we understand the anger and scepticism, we do not believe that the criticism directed at us accurately reflects who we were then or who we are now,” Solomon said. “We believe our culture and our processes around our due diligence and compliance was strong at the time, and is even stronger today.”
Solomon, who took over the top spot at Goldman in October, said the bank conducted due diligence of the bond offerings. He admitted: “What we did not anticipate was that a group of individuals and foreign officials would orchestrate such a brazen scheme.”
Leissner, who is married to former American model and now-TV celebrity Kimora Lee Simmons, is today treated almost like a banking pariah. He is shunned by his former colleagues as was evident by his absence at a recent party to celebrate his former firm’s 150th anniversary.
He earned his company “tens of millions of dollars at this peak,” a Financial Times report said. The same report added that Leissner may now be “the biggest ever threat” to Goldman’s reputation.
“Once praised by executives as an example to emulate, he has become a pariah inside the bank, after pleading guilty to bribery, conspiracy and money laundering charges in connection with a vast fraud at Malaysia’s state development fund,” Financial Times (FT)reported.
While Goldman Sachs has attempted to distance itself from the controversy, Leissner’s own admission that concealing information from the bank’s compliance officers was “very much in line” with Goldman Sachs’ business culture, was a serious body blow.
The Malaysian government has put an amount — US$7.5 billion (RM31.25 billion) — to the compensation it is seeking from Goldman Sachs for its blunder over 1MDB. Finance Minister Lim Guan Eng told FT that the government is looking for reparation beyond the sum of its losses in the “excessive” US$600 million fees paid to Goldman Sachs and three bonds arranged by the bank.
“The bond offerings were always controversial, due to the high amount Goldman earned from the fundraising and the fact that it acted as a sole bookrunner on such a large deal.
“The long-term damage to Goldman’s franchise is hard to quantify. Executives say that so far it has been limited to Singapore and Malaysia. But the head of a rival investment bank argues that Goldman ‘won’t be as aggressive and as cute as it used to be…it will lose its edge’,” FT reported.
Indeed, Leissner’s weakness for “wine, women and song” is likely to play a dominant role in Goldman’s anticipated global fallout as a world-class financial player.
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