IMD scandal: Goldman Sachs and DOJ in cahoots

U.S. DOJ, Goldman worked to keep evidence from banker in 1MDB case, his lawyer alleges
Published 24-Mar-2021 by Nick Kochan

A lawyer for a former Goldman Sachs executive alleged in court that the U.S. Justice Department and Goldman Sachs have formed an agreement to keep electronic devices used by Tim Leissner, a former Goldman Sachs partner convicted in the 1MDB case, out of the hands of Roger Ng, the ex-Goldman executive, who is fighting a U.S. prosecution on 1MDB offences.

“We’re contending that the DoJ and Goldman Sachs have reached an accommodation so that Goldman Sachs retains the phones so that the DoJ does not have them in their physical possession. If they did they would have to hand them over to us. We think this is a ruse,” said Ng’s lawyer, Marc Agnifilo, of Brafman and Associates. The devices could contain information that would support Ng’s defense, Agnifilo said.

Ng was accused in 2018 of conspiring to launder money and bribe government officials in Malaysia and Abu Dhabi through bond offerings that Goldman Sachs handled. In May 2019, he pleaded not guilty and is awaiting trial.

Goldman and the Justice Department both declined to comment on the accusation.
Leissner was the chairman of Goldman Sachs in South East Asia as Goldman Sachs issued $6.5 billion of bonds for 1MDB, the Malaysian sovereign wealth fund in 2012 and 2013.

This was the subject of widespread allegations of fraud carried out by Jho Low, a Malaysian financier who is now a fugitive. Former Malaysian Prime Minister Razak Najib was convicted of 1MDB offences in July 2020.

Leissner in 2018 pleaded guilty to two counts of conspiring to launder money and of violating U.S. anti-bribery law. His sentencing is expected to follow the Ng trial. Leissner also reached a $43.7 million settlement with the the Securities and Exchange Commission and was barred from the securities industry.

In letters sent from January to March of this year to the U.S. federal judge in New York and to the U.S. Attorney’s Office, Ng’s lawyers three times asked for access to the devices. The government, however, failed to confirm the existence of the devices.

“We asserted that the Government has constructive possession and control over numerous electronic devices belonging to or used by Leissner. The Government ignored this letter,” wrote Agnifilo. “We knew there must be phones, but all we got was silence,” said Agnifilo.

The Justice Department acknowledged the existence of the devices only after the fourth request. The department said on March 17 that it was unable to hand them over as they were being held by Goldman Sachs in Hong Kong, and Goldman was refusing to hand them over to the government, Agnifilo wrote.

“The Government’s proferred reason for not providing the contents of the Leissner devices is that when the Government requested Goldman Sachs to hand over the devices, Goldman Sachs refused,” Agnifilo said in one of two letters sent to the judge in the Eastern District of New York last week.

“The notion that, in the face of utter ruin at the hands of the Department of Justice, that Goldman would flat out refuse to turn over the Leissner devices in response to a demand by the Government is nothing short of preposterous,” he said.

Goldman reached a deferred prosecution agreement last October and agreed to fully cooperate with the government investigation, Agnifilo said. “When the Government became aware of the Leissner devices, and their possession by Goldman Sachs, Goldman Sachs would either have been engaged in active negotiations with the Government or was already party to the DPA.”

Goldman Sachs agreed to a $2.9 billion settlement with the U.S. government, in which it acknowledged “conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials.”

The bank reached a $3.9 billion settlement with the Government of Malaysia in July 2020.
“The truth is that the (U.S.) Government got caught hiding Leissner’s devices,” Agnifilo wrote to the judge. “The Government did not tell us that Goldman Sachs had the devices all along precisely so we would not subpoena Goldman,” said Agnifilo. It was unknown whether Goldman itself would be compromised by the material on the devices.

Ng would not have known about the devices had his trial gone ahead as planned in May 2019. However, it has been postponed four times and is now expected to be held this June or July.

Ng returned to the United States in February 2019. He has admitted introducing Low, who has denied wrongdoing, to the bank but said that is where his role stopped.

Agnifilo called Leissner the “main middleman” between Goldman and Low.
The contents of Leissner’s devices, understood to be a Blackberry supplied by Goldman Sachs and an Ipad, are not yet known to Agnifilo. He speculated it contained communications between Leissner and co-conspirators in the 1MDB case. “It could be a goldmine of information about 1MDB,” he said.

Agnifilo alleged that the U.S. government itself knows the contents of the devices. “It defies common sense to think that, in the middle of this massive case, the government would not ask Goldman Sachs to describe, summarise or give some idea of the Leissner devices in Goldman Sachs’ possession. It also defies common sense that Goldman Sachs would not have done so if asked by the Justice Department,” said the letter to the court.
The defence believed that Goldman and the DoJ were workign as a team against Ng, Agnifilo said.

In a separate case, in the Southern District of New York, Razak Najib, the former Malaysian prime minister convicted of 1MDB offences, is seeking to subpoena evidence from Goldman Sachs and Leissner. This included evidence from the electronic devices, said Najib’s lawyer, Kevin Carroll, from Wiggin and Dana.

“[Mr. Leissner and Goldman Sachs] are in fact in possession of precisely the type of exculpatory material [Mr. Razak] seeks. Finally, the revelations of Mr. Ng’s counsel make even more clear that … the subpoenas to [Mr. Leissner and Goldman Sachs] should be promptly enforced,” Carroll wrote.

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