Ex-Goldman conviction is partial justice for 1MDB

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WASHINGTON, April 8 (Reuters Breakingviews) - A decade after Goldman Sachs (GS.N) helped 1MDB raise billions of dollars, one of its former employees has been brought to justice for the fraud. A U.S. jury on Friday found banker Roger Ng read more guilty in the $4.5 billion bribery plot involving Malaysia’s sovereign wealth fund. But his ex-boss, who played a bigger role, may get a lesser penalty while the Wall Street firm got off with $5 billion in fines. It’s only a partial redress.

The 1MDB scandal, one of the biggest cases of overseas corruption, ensnared top government and bank officials alike. Goldman raised $6.5 billion for 1MDB through bond sales, receiving $600 million for its services. About $4.5 billion was misappropriated from the fund and allegedly doled out to government officials, including ex-Malaysian Prime Minister Najib Razak, spent on items including a super-yacht and financing “The Wolf of Wall Street”.

Yet Ng, Goldman’s former top banker in Malaysia, will likely be the only one who faces judgment in an American court. He was accused of receiving $35 million in illicit funds and faces a maximum prison sentence of 30 years for three counts of conspiring to launder money and violating anti-corruption laws.

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Others who played bigger roles in the scheme face lighter penalties. Tim Leissner, Goldman’s former chairman in southeast Asia, testified against Ng, saying the pair lied to bank executives and others to hide the kickbacks, including the involvement of Malaysian financier Jho Low, the only other person charged by the United States. Leissner, who pleaded guilty in 2018 and forfeited $44 million, faces one less charge than Ng and could receive leniency for his assistance. Low is still a fugitive.

Ng’s trial largely endorsed Goldman’s claims that the fraud was the work of a few bad actors inside the bank. However, the scandal exposed embarrassing lapses in its controls. Compliance and other officials flagged Low’s role in vain. The bank got away with a stiff penalty and a guilty plea by its Malaysian unit. In 2020, the bank asked current and past executives, including former boss Lloyd Blankfein, to give back $174 million in compensation.

Prosecutors said during the Ng trial that the scheme hurt the Malaysian people and is deeply unfair to those who play by the rules. It’s a common refrain following banking scandals. But top-level executives are rarely held accountable. The 1MDB conviction is another imperfect deterrent for future miscreants.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

- A federal U.S. jury on April 8 found Roger Ng, the former top banker for Goldman Sachs in Malaysia, guilty of conspiring to launder money and violating anti-corruption laws linked to the country’s sovereign wealth fund 1MDB.

- Ng was accused of receiving $35 million in illegal kickbacks and helping his ex-boss, Tim Leissner, embezzle money and bribe officials as part of $4.5 billion that was misappropriated from 1MDB and diverted to government officials, bankers and others. Ng pleaded not guilty.

- Goldman in 2020 paid about $5 billion in global penalties and its Malaysian unit pleaded guilty in a U.S. Justice Department case. Leissner, the bank’s former chairman of Southeast Asia, pleaded guilty in 2018, forfeited $44 million and is cooperating with prosecutors, including testifying against Ng.

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Editing by Peter Thal Larsen, Sharon Lam and Pranav Kiran

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