Goldman’s most notorious banker turns star witness in 1MDB trial

by BLOOMBERG

BROOKLYN • Almost four years after pleading guilty for his role in the 1Malaysia Development Bhd (1MDB) scandal, Goldman Sachs Group Inc’s former South-East Asia chairman Tim Leissner  (picture) is about to speak publicly for the first time.

Leissner is expected to be the star witness in the US government’s case against his former subordinate Roger Ng, the only Goldman banker to go on trial for the multibillion-dollar bribery scheme.

Opening statements were scheduled to begin yesterday in Brooklyn. Each man faces the possibility of decades in prison for their work together.

Leissner pleaded guilty in August 2018 to a count of conspiracy to violate US anti-bribery laws and to conspiring to launder money.

He was ordered to forfeit US$44 million (RM184.36 million). Goldman paid US$5 billion in fines and apologised for breaking the law. Ng, however, has chosen to fight the case against him.

His lawyers have cast him as Leissner’s deputy, a bookish banker who was the first to warn Goldman compliance about Malaysian financier Jho Low.

The trial will once again cast an uncomfortable spotlight on Wall Street’s most influential bank, which has failed to wash off the stain from its nefarious role in the scandal.

The Ng-vs-Leissner show marks the first public examination in the US of the part played by Goldman Sachs bankers in enabling a historic loot that shocked in its reach and chutzpah.

Goldman had hoped the US$5 billion in penalties it’s been forced to pay was enough to quash further scrutiny. Instead, executives there are keeping a wary eye on proceedings in a Brooklyn courtroom.

Their only hope: The fallout from this latest airing of its Malaysia dealings doesn’t radiate beyond the ex-employees, who’d already been cast aside as profit-chasing bankers gone rogue.

Leissner, the more flamboyant face of the scandal, is likely to spend several days on the stand. Prosecutors will use his testimony to try to show that Ng played a critical role in the scheme.

The last time Leissner spoke publicly was when he pleaded guilty. A chastened Leissner, reading from a prepared statement, told the court he and unnamed colleagues concealed from his employer that Jho Low was involved in one of the bond deals and was paying bribes and kickbacks.

“I knew that this was contrary to Goldman Sachs’ stated policies and procedures,” he told the judge in Brooklyn.

Leissner hasn’t been sentenced yet and is free on a US$20 million bond. His guilty plea and cooperation in the case against Ng are meant to reduce his sentence, which is likely to be announced later this year.

Before his fall from grace, Leissner had lived a golden life as a Goldman executive — he rubbed elbows with heads of state, he made millions, he married famous former model Kimora Lee Simmons.

The 52-year-old German national was the kind of banker who seemed to know everybody. He embodied the Wall Street alchemy that transforms proximity to power into money.

His father was a Volkswagen AG executive in Yugoslavia during the Bosnian War before stints in Mexico and China. Leissner graduated from Germany’s University of Siegen and got an MBA from the University of Hartford in Connecticut in 1992.

He joined Goldman in 1998 and became chief of staff to Richard Gnodde, president of the bank’s Asia operations and now head of the bank’s international business. By 2006, Leissner was named a partner and in 2014 he became the firm’s South-East Asia chairman.

He was an early advisor to 1MDB, a fund created to pursue investment and development projects for the economic benefit of Malaysia and its people.

Over two years, Goldman made around US$600 million working on three bond sales that raised US$6.5 billion for 1MDB, dwarfing what banks typically earn from government deals.

Those bond deals and others helped Leissner get “large year-end bonuses” from Goldman, according to the US government.

But US authorities said Leissner was using bribes and kickbacks to get and retain 1MDB’s business, and that he embezzled from the fund for himself and others.

More than US$2.7 billion of the US$6.5 billion raised was misappropriated, according to court filings.

Between mid-2012 and late 2014, “more than US$200 million of the proceeds of the three 1MDB bonds and other 1MDB business was transferred” to accounts controlled by Leissner and a co-conspirator, the US government said.