The Phaserl


JPMorgan, Deutsche Bank, Rothschild Yanked Into Probe Of Goldman-Backed Malaysian Slush Fund

from Zero Hedge:

When last we checked in on the 1MDB saga, Goldman was busy tying up a few loose ends.

Tim Leissner, the banker who built the firm’s Southeast Asia operation from the ground up and the man behind a series of questionable deals that funded what would eventually become Malaysian PM Najib Razak’s personal slush fund, was essentially forced out in January, after bank investigators uncovered what they said was an unauthorized reference letter.

Apparently, Leissner tried to secure an internship for the son of a possibly shady businessman tied to an Indonesian copper mine. The story is absurd on all kinds of levels, but rather than recount the entire thing for the umpteenth time, we’ll simply give you the Cliff’s Notes version courtesy of Bloomberg:

Last year he was in talks to provide financing for a group of investors, including Sudjiono Timan, who were seeking to buy a controlling interest in Newmont Mining Corp.’s copper operations in Indonesia, according to two people familiar with the deal who asked not to be identified discussing confidential information.

Timan, whose ties to the Newmont deal haven’t been previously reported, was convicted on corruption charges in 2004. Even though Indonesia’s Supreme Court reversed the conviction in 2013, before the Newmont deal took shape, Goldman Sachs told Leissner it wouldn’t move forward on the transaction as long as Timan was a sponsor, the people said. Timan withdrew as an investor but acted as an adviser to the remaining sponsors, according to the people. When the New York-based bank learned of Timan’s continuing involvement, it decided not to proceed, they said.

The deal committee reviewing the transaction opted against it, one of the people said, in part because the bank didn’t think Leissner provided enough information about Timan’s involvement. When Goldman examined Leissner’s messages after pulling out of the Newmont deal, it discovered he had used the firm’s letterhead to write a reference letter in violation of company rules, according to the person.

Frankly, that story is the worst kind of nonsense. Only a complete simpleton would believe that a man who at one time was one of the bank’s most revered and powerful executives (at least as it relates to the Squid’s overseas ops) was fired because he used the firm’s letterhead on a reference letter. Furthermore, the idea that Goldman Sachs is allergic to deals that have ties to corrupt individuals is laughable.

The real reason Leissner was let go is simple: he effectively helped to create 1MDB, which is now at the center of a global corruption probe being conducted by more regulators and investigatory bodies than you can count on both hands. Goldman wants nothing to do with it, or as little to do with it as possible, and that means getting rid of the man who started it all by floating two bond deals that financed what was supposed to be a development bank, but which turned into a checking account for Malaysia’s prime minister.

Anyway, it’s not just Goldman that’s involved. On Friday we learn that the DoJ has now asked Deutsche Bank and JP Morgan to explain their own dealings with 1MDB. “JPMorgan and Deutsche were not the target of the investigations at this stage, but had only been asked to provide details,” Reuters writes, before adding that “Singapore’s central bank has also asked financial institutions to provide details of any transactions linked to the Malaysian fund.”

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