A trial got under way on Monday in New York federal court for a former Goldman Sachs employee who has been charged in connection with the multibillion-dollar 1MDB scandal.
Roger Ng, a former managing director at Goldman Sachs, was arrested in Malaysia in 2018 at the request of US authorities and charged with conspiring to bribe officials and launder billions of dollars from the Malaysian state investment fund. He was later sent back to the US to face the charges.
Ng, 49, has pleaded not guilty. If convicted, he faces up to 30 years in prison.
Prosecutors on Monday said Tim Leissner — a former Goldman banker who has pleaded guilty to charges of conspiring to launder money and violate foreign bribery laws in connection with the 1MDB scandal — is expected to take the stand. Leissner has a co-operation agreement with the government in the hope of receiving a more lenient sentence.
The trial, which was delayed due to the Covid-19 pandemic, has renewed attention on a global scandal that has reached from Malaysia to Switzerland and the US, with American officials labelling it “kleptocracy at its worst”.
The Department of Justice alleges a total of $4.5bn was misappropriated from 1MDB, an investment fund set up by the Malaysian government in 2009 to further the south-east Asian country’s development via partnerships and foreign direct investment.
Prosecutors said money looted from the fund was used to buy a 22-carat pink diamond, luxury property and finance the Oscar-nominated film The Wolf of Wall Street, among other things.
For Goldman, the trial is a reminder of one of the biggest scandals in the Wall Street bank’s 153-year history.
In addition to Ng, the 1MDB case has primarily implicated two other former Goldman investment bankers: Tim Leissner, who has pleaded guilty to charges of conspiring to launder money and violate foreign bribery laws; and Andrea Vella, a former partner at the bank who the Federal Reserve has banned from working in US banking.
Goldman earned $600mn in fees for its work with 1MDB on three bond offerings in 2012 and 2013, which raised roughly $6.5bn. Of that, the DoJ alleges that more than $2.7bn was misappropriated by Jho Low, a Malaysian financier accused of masterminding the fraud, Ng and others. Low, who has been charged by countries including the US, remains at large and denies wrongdoing.
Marc Agnifilo, Ng’s New York-based lawyer, told the Financial Times in a statement: “Roger Ng waived extradition to voluntarily come to this country because he is innocent. After being here over 1,000 days, he looks forward to his trial and to returning home to his wife and young daughter.”
Ng was also charged in Malaysia for allegedly bribing local officials to secure involvement in arranging the 2012 and 2013 bonds for 1MDB. He has pleaded not guilty.
The scandal has had knock-on effects across Goldman’s most senior ranks.
Its board of directors called the bank’s involvement in the 1MDB scheme the result of “institutional failures”. Goldman has moved to claw back up to $175mn in pay and bonuses from current and former executives, including David Solomon, the bank’s current chief executive who was Goldman’s co-head of investment banking at the time of the bond offerings, and his predecessor Lloyd Blankfein.
Solomon also had his pay for 2020 docked by $10mn to $17.5mn due to the 1MDB scandal.
Goldman, which said it was lied to by “certain members of the former Malaysian government and 1MDB”, ultimately paid a record $2.9bn in a global settlement. Its Malaysian subsidiary pleaded guilty to a bribery charge. The bank also struck a settlement of up to $3.9bn with Malaysia over losses the south-east Asian country suffered from the scandal.