..As part of an inquiry being examined by a U.S. grand jury, investigators are trying to determine if Goldman’s employees had reason to believe that some of the proceeds from bond deals done for the fund, 1Malaysia Development Bhd., known as 1MDB, weren’t being used for their intended purpose, the person said. Federal authorities also are exploring whether Goldman’s hiring practices in the region violated U.S. anticorruption laws, the person said.
The Wall Street Journal has previously reported that Goldman was part of a broad probe by the Federal Bureau of Investigation and the Justice Department. The investigation remains in its early stages, and neither Goldman nor 1MDB has been accused of wrongdoing.
…Goldman profited handsomely from its dealings with 1MDB. Mr. Leissner helped counsel the fund from its inception, laying the foundation for a series of lucrative assignments. Goldman advised the fund on three acquisitions and arranged the sale of three bonds valued at a total of $6.5 billion that brought in $650 million for the firm.
…1MDB officials directed the Wall Street firm to wire a portion of the proceeds from the deal to the fund’s account at BSI SA, a small Swiss private bank, according to people familiar with the matter.
Private banks don’t typically receive transfers of that size, and the unusual step caught the attention of lawyers at Linklaters, Goldman’s legal counsel on the transactions. Kevin Wong, a partner at the law firm, sent a note to bankers at Goldman alerting them to the fact that the money was being sent to a private bank, according to a person familiar with the matter.
…The bond ostensibly was meant to fund the construction of a new financial center in Kuala Lumpur to be named after the father of Malaysian Prime Minister Najib Razak, but little building has occurred. 1MDB moved half of the money raised into overseas mutual funds and used the remainder to pay down debt and for working capital, according to its financial accounts.
The Journal reported this month that global investigators believe $681 million–of a total of $1 billion deposited in the personal accounts of Mr. Najib–originated with 1MDB. Investigators in two of the countries probing 1MDB, while agreeing most of the money transferred to Mr. Najib’s account ultimately was returned, believe the money was transferred from 1MDB through several intermediaries, according to people familiar with the probes.
Mr. Najib has denied wrongdoing or taking any money for personal gain. The 1MDB fund has said that it “has not paid any funds to the personal accounts of the prime minister.”
Malaysia’s attorney general said the money that went into Mr. Najib’s account was a legal donation from a member of Saudi Arabia’s royal family, and most was returned. The attorney general said there was nothing improper and that it was time to stop scrutinizing the deposits, a notion echoed by Mr. Najib.
U.S. investigators also are looking into Goldman’s hiring practices in relation to 1MDB. Goldman hired the daughter of a close aide to Mr. Najb and explored bringing the prime minister’s own daughter to the firm as well, people familiar with the matter said.
Mr. Leissner recommended Goldman hire both women, and when his Goldman colleagues shot down the idea of hiring the prime minister’s daughter, Mr. Leissner recommended Nooryana Najwa Najib to private-equity firm TPG, these people said. She went through a normal interview process and worked at TPG in a low-level marketing position from 2011 to 2014, in both London and Hong Kong, the people said.
source: Morning Star