This article first appeared in The Edge Malaysia Weekly on November 19, 2018 - November 25, 2018
THE US Department of Justice (DoJ) filed its first 1MDB-related criminal charges on November 1 against former Goldman Sachs executives Tim Leissner and Roger Ng Chong Hwa as well as Low Taek Jho or Jho Low. Low, who has gone into hiding, was charged in absentia. Ng has been arrested in Malaysia and is to be extradited to the US soon.
Leissner has, however, pleaded guilty to two charges of money laundering and conspiring to corrupt foreign officials. He has agreed to forfeit US$43 million as part of his guilty plea. His sentencing has been fixed for Jan 17, 2019.
Below, we produce an excerpt from the hearing. Leissner was represented by his counsel Robert O’Neill.
THE COURT: I do want to make sure that you understand that because you are pleading guilty to two separate counts, the sentences could be linked to run consecutive so that you can be sentenced to time on one count and the time sentenced on the second count could be made to run in addition to. Do you understand that?
THE DEFENDANT (LEISSNER): Yes, Your Honour.
THE COURT: Okay. All right. Do you understand these possible consequences of your plea that I have just discussed with you?
O'NEILL: That is potentially possible. It's a potential life sentence if all charges were brought upon Mr Leissner.
THE COURT: Mr Leissner, do you have any questions about the rights you are giving up, the punishment you face, the nature of the charges, the plea agreement, or anything else that you would like to discuss with the Court at this time?
THE DEFENDANT: No, I don't, Your Honour. Thank you.
THE COURT: Are you ready to plead guilty?
THE DEFENDANT: Yes, Your Honour.
THE COURT: Mr O'Neill, do you know of any reason why your client should not plead guilty?
O'NEILL: No, Your Honour.
THE COURT: Are you aware of any viable defences?
O'NEILL: None, Your Honour.
THE COURT: Mr Leissner, what is your plea to Count 1 of the indictment charging you with conspiracy to violate the Foreign Corrupt Practices Act, guilty or not guilty?
THE DEFENDANT: Guilty.
THE COURT: What is your plea to Count 2 of the information charging you with conspiracy to commit money laundering, guilty or not guilty?
THE DEFENDANT: Guilty.
THE COURT: Are you making the plea of guilty voluntarily and of your own free will?
THE DEFENDANT: Yes, Your Honour.
THE COURT: Has anyone threatened or forced you to plead guilty?
THE DEFENDANT: No, Your Honour.
THE COURT: Other than the agreement with the government, has anyone made any promises that caused you to plead guilty?
THE DEFENDANT: No, Your Honour.
THE COURT: Has anyone made any promises as to what your sentence will be?
THE DEFENDANT: No, Your Honour.
THE COURT: Okay. So I need you to tell me in your own words what you did to make you guilty of Counts 1 and 2, keeping in mind the elements of both crimes as we discussed earlier in the proceeding.
THE DEFENDANT: Your Honour, I wrote a statement.
THE COURT: Okay.
THE DEFENDANT: May I read that?
THE COURT: You may.
THE DEFENDANT: Thank you.
THE COURT: Just read it slowly so that the court reporter can take it all down.
THE DEFENDANT: I have read the information filed by the Government. As described in the information, I was an employee of Goldman Sachs (Asia) LLC between approximately 2011 and 2016, as well as of other public subsidiaries of Goldman Sachs, which is identified as US Financial Institution Number 1 in the information. At all times, I was an agent of Goldman Sachs and was a participating managing director of Goldman Sachs.
At all times concerning the 1MDB business that Goldman Sachs conducted with 1MDB between 2009 and 2014, and which is described in the information, including the negotiation and execution of three bond deals and other transactions, I acted on behalf of, and within the scope of my employment and agency of, Goldman Sachs to acquire and execute the 1MDB transaction in business ... 1MDB was a strategic investment and development company wholly owned and controlled by the Government of Malaysia.
As I understood, 1MDB was created to pursue investment and development projects for the economic benefit of Malaysia and its people. While acting within the scope of my employment and with the intent to benefit Goldman Sachs and myself, as an employee and agent of Goldman Sachs, I entered into a conspiracy with those individuals identified in the Government's information to pay bribes and kickbacks to obtain and then retain business from 1MDB for Goldman Sachs.
THE COURT: Including the person identified as the intermediary who you dealt with who then dealt with this entity ...
THE DEFENDANT: Yes, that's correct.
THE COURT: Okay.
THE DEFENDANT: That individual would be Jho Low that you're referring to, I think, as Conspirator Number 1, Co-Conspirator Number 1 in the information.
THE COURT: All right.
THE DEFENDANT: Yes.
THE COURT: Please proceed.
THE DEFENDANT: Yes, Your Honour. The goal of paying bribes and kickbacks was to influence the government officials to take official action so that Goldman Sachs would receive business from 1MDB. I took part in the process of paying some of these bribes and kickbacks. I also knew that some of the funds that would be used to pay bribes and kickbacks to government officials would move through the US banking system.
For instance, I knew that funds derived from Project Magnolia, specifically mentioned in the information, would be diverted to me and others, including government officials, through shell companies beneficially owned and controlled by myself and others in US dollars, and those financial transactions would be processed through the United States. I knew that the use of shell companies in these fund — these fund transfers were designed, at least in part, to conceal and disguise the nature, location, source, ownership and control of the diverted and the stolen funds.
The following is one specific instance involving the movement of funds: On or about Oct 10, 2014, I caused approximately
US$4.1 million to be wire transferred from a foreign bank account controlled by myself and another individual to the US bank account of a New York jeweller in part to pay for jewellery for the wife of a Malaysian government official. I understood that this payment to the New York jeweller was intended to benefit the Malaysian government official and his wife in order to influence the government official to take official acts that would help provide 1MDB business to Goldman Sachs, for the benefit of Goldman Sachs and myself.
During the course of the conspiracy, I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs, including the fact that Jho Low, who is identified as Co-Conspirator Number 1 in the information, was acting as a intermediary for and on behalf of Goldman Sachs, 1MDB, and Malaysian and Abu Dhabi officials.
As stated in the information, on one occasion in 2012, I told a committee at Goldman Sachs that Jho Low was not involved in one of the bond transactions. This was not true. I knew that concealing Jho Low's involvement as an intermediary was contrary to Goldman Sachs's stated internal policies and procedures. I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs, for the benefit of Goldman Sachs and myself, and using some of the proceeds of the 1MDB bonds to do so.
I knew that this was contrary to Goldman Sachs' stated policies and procedures. As a result of these bribes and kickbacks, and in movement of the funds through the bribes and kickbacks, Goldman Sachs received substantial business from 1MDB. The three bond deals and related transactions resulted in substantial fees and revenues for Goldman Sachs, of which and in many cases, it was very proud of at the time. In addition, I received large year-end bonuses as an employee and agent of Goldman Sachs.
That concludes my statement, Your Honour.
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