Singapore has expanded a criminal probe into fund flows linked to scandal-plagued 1MDB to include Goldman Sachs Group Inc., which helped raise money for the entity, people with knowledge of the matter said.
Police in the city-state had been examining Goldman’s relationship with the Malaysian state investment company since at least late 2017, but until recently the firm’s local unit itself wasn’t a focus of any investigation, said the sources, requesting anonymity.
Authorities are trying to determine whether some of the roughly $600 million (Dh2.2 billion) in fees from the three bond deals Goldman arranged for 1MDB, from 2012 to 2013, flowed to the Singapore subsidiary, they said.
Singapore’s widened probe opens a potential new battle front for Goldman less than a week after Malaysia filed the first criminal charges against the firm over a relationship that spawned one of the biggest scandals in its history. Singapore is coordinating closely with the US Justice Department, which is also investigating Goldman and has filed criminal charges against two former senior bankers at the firm, the people said.
Singapore has been clamping down on firms and individuals embroiled in the 1MDB scandal, revoking the licences of two Swiss private banks and jailing several people, but this is its first criminal investigation of a company in the matter.
“The firm continues to cooperate with all authorities investigating this matter,” Goldman spokesman Edward Naylor said.
Singapore authorities didn’t immediately respond to a request for comment. John Marzulli, a spokesman for Brooklyn US Attorney Richard Donoghue, whose office is prosecuting the case, declined to comment.
Singapore police said in an emailed response on Saturday that investigations into entities involved in 1MDB-related offences in Singapore have been ongoing since 2015, while declining to comment further.
The scandal around the fund, the full name of which is 1Malaysia Development Bhd., has reverberated around the globe, spawning a book and an upcoming Hollywood adaptation as it grew to engulf bankers, companies and government officials.
It has also dragged down Goldman’s stock this year. Shares of the company, down 37 per cent since the start of 2018, fell 5 per cent to $160.05 on Friday in New York.
US prosecutors say more than $4.5 billion flowed from 1MDB, through a complex web of opaque transactions and fraudulent shell companies, to finance spending sprees by corrupt officials and their associates.
Singapore authorities could seek to target Goldman’s local unit using the new deferred-prosecution agreement (DPA) system the country adopted in March, the people said. DPAs have been used in countries including the US and UK to police banks and extract billions of dollars in fines over wrongdoing in the past decade. It’s also possible that Singapore would settle for regulatory action against Goldman’s local unit, the sources said.
That unit, Goldman Sachs (Singapore) Pte, reported $244 million of revenue for 2017 and had $1.9 billion of assets at the year-end, its latest financial statement shows. While revenue has been stable over the past few years, assets have fallen sharply, from $2.6 billion in 2014.
The bond sales raised a combined $6.5 billion and were arranged by Goldman Sachs International, a London-based unit. That division, along with the Singapore entity, were among three units named in Malaysia’s criminal charges against the company, which seek fines in excess of both the $2.7 billion of funds allegedly misappropriated plus the fees Goldman reaped — a combined $3.3 billion.
Tim Leissner, the former Goldman partner who oversaw the relationship with 1MDB, is in the US, where he has pleaded guilty to conspiring to launder money and bribery. His former deputy, Roger Ng, was arrested in November in Malaysia and is fighting extradition to the US. He’s also pleaded not guilty to the charges Malaysian authorities levelled against him.