Did Goldman Sachs Violate The Terms Of Its DPA With A Repeat Criminal Bribery Of Malaysian Officials In 2020?

The moment the Anwar government took office in coalition with UMNO last year, law enforcers were triggered into action to search for stolen monies, apparently with a clear sense of what to look for, as well as where.

These investigators have been crawling through Bersatu accounts, now frozen, and shaking down those involved in purported multi-million ringgit kickbacks for contracts – allegations of old-fashioned graft of the clumsy kind.

The money at stake in that particular case is RM300 million. The former Bersatu prime minister Muhyiddin Yassin was among those hauled in for questioning in what is clearly a well-advanced investigation.

But there is evidently much more going on behind the scenes in this search for alleged missing funds, involving sums that one fears could pale the grand kleptocracy of Muhyiddin’s former mentor, Najib Razak, into relative insignificance.

At the end of last week Muhyiddin’s personal lawyer, Rosli Dahlan, re-focused minds on one of the early scandals of ‘Moo’s’ short-lived government by seeking to rebut alleged insinuations against him with threats of legal action.

His threats were in response to a call for a transparent investigation into what happened to the $2.5 billion fine which the US bank Goldman Sachs agreed to pay 1MDB to settle its claims against the bank for facilitating Najib’s heist of $6.5 billion through a series of bogus bond issues from which the proceeds were knowingly diverted.

So, what is Dahlan so heat up about and why is this issue so sensitive?

Here is a reminder of the circumstances of this lightening deal, which Sarawak Report condemned at the time for being highly suspicious and unacceptably secretive back in 2020, shortly after Goldman Sachs had pleaded guilty in America over its criminal conspiracy to defraud the people of Malaysia by bribing foreign officials, namely Najib and his gang of kleptocrats.

Goldman agreed to pay the US authorities $2.9 billion in fines for this criminal violation of America’s Foreign Corrupt Practices Act as part of a so-called DPA (Deferred Prosecution Agreement).

The point of a DPA is that the charges are not waved, but rather left open, so that were the bank to repeat this criminal misdemeanour or fail to abide by the terms of that agreement the prosecution could be re-opened against it and any individuals responsible. This was the clear statement by the authorities at that time:

The Goldman Sachs Group, Inc. (Goldman Sachs or the Company), a global financial institution headquartered in New York, New York, and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over one billion dollars in bribes to high-ranking government officials in Malaysia and Abu Dhabi to obtain lucrative business for Goldman Sachs, underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees.  Goldman Sachs will pay more than $2.9 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere.

Earlier today, in federal court in Brooklyn, Goldman Sachs entered into a deferred prosecution agreement with the United States Attorney’s Office for the Eastern District of New York and the Department of Justice’s Criminal Division, Fraud Section and Money Laundering and Asset Forfeiture Sections (the Department) in connection with a criminal information filed in the Eastern District of New York charging the Company with conspiracy to violate the anti-bribery provisions of the FCPA.  GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.  [Dept Justice statement Oct 20th 2020]

Days later Sarawak Report was forced to conclude that all the signs appeared to indicate that Goldman Sachs had already violated the very terms of its DPA by once again facilitating corrupt behaviour by the Muhyiddin government in return for massive gain to the bank.

If so, it was a flagrant repetition of the earlier criminal conspiracy it had conducted with Najib carried out with the Muhyiddin government just as it was crafting its suspended prosecution deal with the US authorities!

The settlement reached with Muhyiddin was announced in June 2020 just weeks after the Bersatu leader and his motley crew of collaborators seized power from the elected Harapan government in a coup endorsed by the new King.

With the King’s own unelected place-man, Zafrul Aziz, positioned in the Ministry of Finance as part of the deal that established Muhyiddin in office, moves had been put swiftly underway to drop Malaysia’s ongoing legal moves to extract the full $9 billion owed in damages by Goldman Sachs (that was how much the theft they enabled has cost Malaysia), and to also drop the criminal charges against 17 named Goldman Sachs executives identified by Malaysia as being knowing beneficiaries.

So far, only two relatively junior figures at the bank have been found guilty in the United States and will be finally sentenced next month.

In return, Goldman Sachs readily agreed to an instantaneous payment of a cool $2.5 billion to the new administration in cold hard cash, plus a woolly arrangement whereby the bank would assist in the retrieval of assets to the tune of a ‘guaranteed’ $1.4 billion (an arrangement that is already inevitably now under dispute as to the actual value of the assets that have been returned).

In short, Goldman Sachs had got off extremely lightly and saved its shareholders a vast sum of money that could have gone in fines. This would be reflected in the remunerations and bonus packages for executives from the CEO down.

But what did the bank concede to achieve this attractive solution? By November of that year it had become clear that the bank was colluding in an appalling and unwarranted secrecy as to the detailed terms of the agreement and what happened to the money from the time it left the bank.

It should have been straightforward, since all returned monies were scheduled under the previous Harapan government to be paid into a trust fund set up for 1MDB to finance its enormous debts.

That fund was where the entire $2.5 billion ought to have been deposited, having been publicly announced as the sum paid by Goldman in reparations –  registered as such in the bank’s public statements.

However, shortly following his coup Muhyiddin had conveniently used Covid as an excuse to call a ‘national emergency’ that not only involved dealing with the health crisis but also instituted authoritarian rule and closed down Parliament (given he lacked a majority). The King had sanctioned the situation for an initial six months meaning ‘Moo’ could rule by diktat.

As part of this ‘Emergency’ Muhyiddin gave himself full powers to raise and spend money as he liked unchecked and took a leaf out his former boss Najib’s book by clamping down on any inconvenient transparency.

Thus, when ex-PM Mahathir and members of the Public Accounts Committee asked for the details of the Goldman Sachs $2.5 billion transaction to check exactly how the money was handled the Muhyiddin government announced that they would not be releasing the details as it had been classed an Official Secret.

Why, was the astonished response? Why had the money not simply been paid into the 1MDB trust account?

The Malaysian government’s repost beggared belief. The reason, lied the government, was that Goldman Sachs itself had demanded a Non Disclosure Agreement as part of its terms for agreeing to the settlement.

Why would the bank, having announced to the world how much it had paid 1MDB, insist on an NDA over the details of that payment? Goldman is the sort of bank that could honour a $2.5 billion cheque by the morning.

Naturally, the widespread conclusion was that payments/’commissions’ needed to be kept from the public eye and that these kickbacks were to ‘intermediaries’ connected to the recipient party. Inevitably, that was the speculation at the time and many were asking why the Prime Minister had chosen to involve his own personal lawyer, Rosli Dahlan, in these negotiations which should have been carried out by the proper public officials for this role?

Dahlan denied he or his firm received undue levels of payment for their unspecified role in this matter, but would not declare how much he did receive. However, there were soon allegations (complained of by Dahlan) from political rivals of Muhyiddin in UMNO that vast sums – $500 million – had been spirited from the deal and police reports were even made to that effect, all again denied with threats.

Throughout the Muhyiddin government and ensuing Ismail Sabri government that assumed office in August 2021 the official secrecy remained, and for now still does, as Anwar’s probes continue. More possible information and certainly speculation have now started to surface around the whole affair.

However, what is absolutely clear is that whilst the public have no present way of knowing where and how the money was handled following the payment of that fine, the bank Goldman Sachs most certainly does. Post-2008 Goldman has subscribed to so-called Post Transaction Monitoring for deals it enters into, meaning it is able and entitled to trace where the money leaving its accounts has ended up.

Indeed, such scrutiny is part of its duty to report suspicious money flows under anti-money laundering regulations. If the money had gone into an account other than the 1MDB Trust Fund then Goldman Sachs should have reported it, especially if it could be seen to benefit a foreign official or political party – let alone a party to the deal itself.

However, Goldman Sachs have said nothing. They have acquiesced in the secrecy and allowed the terms stipulated by their own bank to be officially cited as the very reason for that lack of transparency over the return of Malaysia’s public money.

If it emerges that money was inappropriately diverted from this deal, therefore, Goldman Sachs would be exposed not only for an inappropriate lack of transparency but for having repeated the very same crime of bribery under the FPCA it admitted to previously.

Specifically, by colluding with foreign officials in their theft of cash in return for a massive material benefit to the bank and its executives by lowering its liability from $9 billion to $2.5/3.9 billion and securing the removal of criminal charges from its executives.

That would constitute an immediate repeat of the very offence for which it has a suspended prosecution hanging over it. What brazen bravado if this turns out to be the case!

The Anwar government investigations will inevitably, one assumes, reveal these hidden details and levels of culpability amongst those concerned. Many in UMNO are equally interested in finding out who, if anyone, benefited from this deal as earlier police accusations have made clear

Now references have started circulating in social media regarding an intriguing investigation launched shortly after the government of UMNO’s Ismail Sabri took office. A massive multi-agency official raid led by Bank Negara on certain bank accounts took place in November 2021 without naming who the actual owners of those accounts might be.

The assets amounting to RM118 million have been frozen ever since and proceedings lodged against the company i-Serve Online Mall Sdn Bhd, accused by prosecutors of transferring the suspicious transactions involved.

Yet the prosecution itself has become likewise frozen as powerful forces have appeared to intervene and the courts have found themselves persuaded that in the absence of the naming of those beneficiaries a ‘judicial review’ of the legitimacy of the prosecution should be allowed.

Coincidentally, the lawyer acting for the defendants in this unusual case, which has been widely reported as it has progressed and then halted in the courts, is none other than Rosli Dahlan.

He is therefore in a perfect position to refute or confirm further social media allegations which insinuate that the cash involved indeed originated from money siphoned out of the officially secret Goldman $2.5 billion transaction.

To follow – Sarawak Report will tally the prosecutions so far in the United States: the little people who have faced punishment and the bigger fish who swam free.

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