1MDB scandal: Guilty plea by banker enough to nail Najib?

KUALA LUMPUR, Nov 2 – The news from the United States Department of Justice (DoJ) on the indictment of fugitive Malaysian businessman Low Taek Jho (Jho Low) as well as two Goldman Sachs bankers – Roger Ng Chong Hwa, a Malaysian, and American Tim Leissner has hit the headlines over night.

Many in Malaysia are now lauding the filing of criminal charges against the infamous Jho Low by the DoJ, after he had been named in previous civil suits for the seizure of assets purchased using funds allegedly embezzled from 1MDB.

However, most notable in the DoJ’s official statement yesterday is the fact that Leissner has admitted guilt for his part in the whole scandal and has agreed to pay US$43.7 (about RM182 million) million in restitution of ill-gotten gains.

This is not the first act of funds being returned as restitution by parties involved in either the stealing of funds from the Malaysian government or for the use of such funds.

Red Granite returned US$60 million of alleged 1MDB funds

In March this year, entertainment industry journal Variety reported that Red Granite Pictures agreed to pay US$60 million (then about RM234 million) to the US government to resolve allegations that it profited from corrupt money involving 1MDB.

However, under the agreement, the producer of films such as “The Wolf of Wall Street” does not admit to any wrongdoing.

“We are glad to finally put this matter behind us and look forward to refocusing all of our attention on our film business,” Red Granite said in a statement.

Under the terms of the settlement, until the US$60 million is paid in full, Red Granite CEO Riza Aziz will not draw any salary from the company above what is required to maintain health insurance coverage, the Variety report said. Riza is the stepson of former prime minister Datuk Seri Najib Razak.

There is no reason for the DoJ to continue to hide the identity of Malaysian Official 1 (MO1) with the criminal charges being filed.

Also, the guilty plea by Leissner and the return of funds by him and the company founded by Najib’s stepson should just add to the Malaysian government’s case against the former PM.

Jho Low maintains innocence as fellow Malaysian conspirator arrested

Though Jho Low remains a fugitive, his lawyers released a statement maintaining that their client was innocent of all charges.

“As noted in the indictment today, Low held no formal position at 1MDB, nor was he ever employed by Goldman Sachs, or the governments of Malaysia or Abu Dhabi.

“Furthermore, the bond offerings detailed in the indictment were undertaken openly and lawfully between experienced, well-regulated financial institutions and government entities,” said the statement issued through Australian public relations consultancy Wells Haslem Mayhew Strategic Public Affairs.

However, the other Malaysian charged was not so lucky.

Ng was arrested by arrested yesterday by Malaysian police following the DoJ indictment and is expected to be remanded today for further investigation into the 1MDB scandal.

The criminal charges by DoJ

In the court filing on the criminal charges yesterday, Low, Ng, Leissner and the other co-conspirators had between 2009 and 2014, used Low’s relationships to obtain and retain business for Goldman Sachs through the promise and payment of hundreds of millions of dollars in bribes, including to ensure 1MDB awarded the financial institution a role in three bond transactions known internally at the financial Institution as “Project Magnolia,” “Project Maximus” and “Project Catalyse.”

The DoJ charged all three men with conspiring to launder billions of dollars from 1MDB, a strategic development fund set up for the benefit of the development of the country, and conspiring to bribe officials in Malaysia and Abu Dhabi, violating the Foreign Corrupt Practices Act, according to an AFP report.

Ng was also charged with conspiring to violate the internal controls at Goldman Sachs, which underwrote more than US$6 billion in bonds issued by 1MDB.

The DoJ also alleged that under the 2012 “Project Magnolia” bond offering by 1MDB, Low told the ex-Goldman bankers they needed to bribe officials in Malaysia and Abu Dhabi to guarantee that the transaction went through.

Hundreds of millions of dollars in bribes were subsequently paid to officials in Malaysia and Abu Dhabi, according to the DoJ.

Following the successful execution of the bond transaction, more than US$500 million of the proceeds were misappropriated into shell companies controlled by Low, Leissner, Ng and other co-conspirators.

Some of the funds went to finance the movie, “The Wolf of Wall Street,” a 2013 Oscar-nominated film starring Leonardo diCaprio about Jordan Belfort, a corrupt stockbroker who was sent to prison for fraud, according to the DoJ.

Last year, it was reported that Australian actress Miranda Kerr and DiCaprio have also returned gifts, including jewellery and art works worth millions, which they had received from Jho Low to the DoJ.