On March 12, the U.S. Federal Reserve Board announced that it was banning two former senior investment bankers in the Goldman Sachs Group, Tim Leissner and Ng Chong Hwa (also known as Roger Ng), for their participation in a scheme to illegally divert billions of dollars from the Malaysian sovereign wealth fund 1Malaysia Development Berhad (1MDB).
The Board stated that in their capacities as senior investment bankers employed by foreign subsidiaries of Goldman Sachs, Leissner and Ng coordinated bond offerings arranged by Goldman for 1MDB in 2012 and 2013. “The funds diverted from 1MDB,” according to the Board, “were then used for the conspirators’ personal benefit and to bribe certain government officials in Malaysia and Abu Dhabi.”
Leissner, who consented to the permanent ban, was fined an additional $1.42 million by the Board. In 2018, Leissner had pleaded guilty to a criminal information, filed in the Eastern District of New York and unsealed in November 2018, that charged him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and money-laundering conspiracy in connection with his participation in the scheme described above. In connection with that plea, Leissner was also ordered to forfeit $43,700,000.
In November 2018, Ng was arrested in Malaysia pursuant to a provisional arrest warrant filed by the United States, and the U.S. Department of Justice announced the unsealing of an indictment in the Eastern District of New York against Ng and fugitive Malaysian financier Jho Low for FCPA conspiracy and money-laundering conspiracy for their roles in the above-described scheme. In December 2018, Malaysia also indicted Ng for his role in the scheme. Ng subsequently agreed to waive extradition and to return to the United States to face the charges against him, but Malaysian Attorney General Tommy Thomas reportedly “advised the government against doing so until Ng’s cases in Malaysian courts are completed.”
Note: The Board’s action against Leissner and Ng reflects a continuation of the more aggressive stance that it has taken on bankers’ participation in foreign bribery since the 2016 FCPA resolution with JP Morgan Securities (Asia Pacific) Limited (JP Morgan APAC). In that latter resolution, which involved hiring of children of foreign government officials in order to obtain improper business advantages, the Board permanently barred two former JP Morgan APAC investment bankers from the industry without the bankers’ being criminally charged in the United States, and assessed a $1 million civil penalty against one of the former bankers and a $500,000 civil money penalty against the other former banker.
In this case, the Board chose to take action against Ng even before he pleaded or was found guilty of either set of criminal charges, and evidently negotiated a resolution with Leissner after his 2018 guilty plea. There is every reason to expect that the Board will continue similar uses of its prohibition authority in future FCPA cases involving the financial sector.