Goldman Sachs Group Inc. is being investigated by U.S. investigators whether the American banking firm broke the law when it didn’t sound an alarm about a suspicious transaction in Malaysia. At issue is US$3 billion Goldman raised via a bond issue for Malaysian state investment fund 1Malaysia Development Bhd – 1MDB.

 

The 147-year-old bank might have breached the U.S. Bank Secrecy Act, if it can be established that the banker was working hand in glove with 1MDB in sending half of the money raised to offshore accounts, with some later ending up in Prime Minister Najib Razak’s private bank account. In short, Goldman could be involved in money laundering.

While Goldman Sachs seems innocent in the case of 1MDB scandal, another explosive revelation shows the American bank is nothing but one of financial big boys willing to do anything for money. And that includes paying for prostitutes, private jets and 5-star hotels and held business meetings on yachts to win business.

 

The Libyan Investment Authority (LIA), the country’s sovereign-wealth fund, is suing Goldman Sachs for US$1.2 billion (£846 million; RM4.9 billion). LIA are claiming for losses on 9 trades that Goldman Sachs executed for the fund between January and April 2008. Those trades expired worthless in 2011, wiping off almost all of LIA’s investment through the trades.

However, Goldman earned about US$222 million (£156.6 million; RM908 million) in profits from those trades. If that was not pain enough, emails provided to the court show how Goldman executives insulted LIA’s financial knowledge saying – “They are very unsophisticated – and anyone could ‘rape’ them.”

 

Besides describing the Libya sovereign wealth fund as having “zero-level” financial sophistication, another Goldman executive wrote to a colleague that “you just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels.”

Goldman denies wrongdoing as the case is being heard in the High Court in London. One former Goldman executive – Youseff Kabbaj – had been instructed to “stay a lot in Tripoli. It is important you stay super close to clients on a daily basis. Teach them, train them, dine them.” And so, Mr. Kabbaj did as what former Goldman Sachs Southeast Asia chairman, Tim Leissner, had done for 1MDB.

 

In the 1MDB scandal, Mr. Leissner had recommended that his firm hire the daughter of Jamaludin Jarjis, a senior politician and close aide to Malaysia’s Prime Minister, Najib Razak, as a bank analyst in Singapore in 2010. In the case of LIA, Mr. Kabbaj had arranged for an internship for Haitem Zarti, the younger brother of Mustafa Zarti, the LIA’s former deputy chief.

Clearly, both Mr. Leissner and Mr. Kabbaj had done their respective role in hoping to influence decisions by the investment funds, 1MDB and LIA respectively. After successfully arranged an internship, which paid US$51,000 (£36,000; RM208,800), at the bank for Haitem Zarti, Mr. Kabbaj texted Mustafa Zarti on April 17, 2008 with the “good news”.

 

In the following days, Mustafa Zarti committed to the largest four disputed trades with Goldman, involving payments of more than US$828 million. But that was not all. Mr Kabbaj took Haitem Zarti on holidays to Morocco on various occasions. Mr Kabbaj also took him to Dubai for a conference, with the business class flights and 5-star Ritz Carlton being paid by Goldman Sachs.

The fun didn’t stop there. Documents submitted by the Libyans show that during that trip Mr Kabbaj went so far as to arrange and pay US$600 for “a pair of prostitutes to entertain them both” one evening. The internship offered by Goldman Sachs “has been and may still be the subject of investigation” by the Securities and Exchange Commission in the U.S.

 

Other Articles That May Interest You …

• How Najib Razak’s Scandalous 1MDB Brings Down A 143-Year-Old Swiss Bank
• Riza Aziz’s London Mansion – UK Is “Fantastically Corrupt” For Doing Nothing
• Don’t Say We Didn’t Warn You – Get Ready For 8% GST Next Year (2017)
• The WSJ Is Hustling Razak Family – Nazir Could Have Committed Money Laundering
• Relax Najib, ABC Reporters Just Asking Questions, Not Throwing Shoes At You
• FB Angry Emoji – CY Leung Gets 170K, Najib Razak Most Hated In ASEAN
• Did Najib Pawn & Drag Malaysian Soldiers Into Syrian War For RM2.6 Billion?
• What Took You So Long, Singapore? Trying To Cover Najib’s 1MDB Scandal?
• Najib’s Twin Scandals – It’s Not Over Yet, It’s Just The Beginning
• WSJ’s Last Bombshell For The Year – Najib’s $700 Million Came From 1MDB
• If The US Really Wants To Put Najib On Trial, There’s No Escape

Tweet

June 14th, 2016 by financetwitter

If you enjoyed this post, what shall you do next? Consider: