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Singapore to ban ex-Goldman banker amid 1MDB probe

Tim Leissner, the former star dealmaker for Goldman Sachs in Southeast Asia, is to be banned from Singapore’s securities industry for 10 years over breaches relating to the multibillion-dollar scandal at Malaysia’s troubled state investment fund 1MDB, while Standard Chartered and Coutts have both been fined.

Mr Leissner, who joined Goldman in Asia in 1998 and helped raise $6bn for 1MDB with three bond issuances, is being punished by the Monetary Authority of Singapore in relation to an unauthorised reference letter that vouched for Jho Low, a Malaysian businessman alleged by US authorities to have laundered funds diverted from 1MDB and to have lived a lavish lifestyle on the proceeds. Mr Low has previously denied wrongdoing.

Goldman is not accused of any wrongdoing by the MAS, but the regulator confirmed that it was working with foreign counterparts on an examination of the bank’s role in the 1MDB bond transactions.

Goldman earned a $300m fee for a 2013 bond deal, which raised $3bn. The bank has since become embroiled in a scandal over allegations of grand corruption relating to 1MDB.

Swiss authorities allege that up to $4.8bn was diverted from companies linked to 1MDB. Malaysian Prime Minister Najib Razak has been buffeted by claims that $681m was transferred into his personal bank account.

Mr Najib denies wrongdoing and has been cleared by Malaysia’s attorney-general.

Mr Leissner, who left Goldman in February, managed the client relationship with 1MDB for all of its three bond issues from 2012 to 2013. 

A team of Goldman staff, mainly from Hong Kong but also from Singapore, Malaysia and the United Arab Emirates, arranged the bond issues, and they were fully underwritten by London-based Goldman Sachs International, the MAS said.

Mr Leissner was found by MAS to have issued an unauthorised reference letter, using Goldman letterhead, to a financial institution based in Luxembourg in June 2015.

The letter stated that Goldman had conducted due diligence on Jho Low and his family, and had not detected any money-laundering concerns with respect to either, MAS said.

“These statements were untrue and were made by Mr Leissner without Goldman Sachs’ knowledge or consent,” the MAS said.

Marc S Harris, Los Angeles-based lawyer for Mr Leissner, said that his client had been invited by MAS to respond to the allegations against him and looked forward to doing so.

“Prior to today, Mr Leissner had not heard of any contemplated regulatory action by the MAS and had not been contacted by the MAS or given any opportunity to respond to the MAS regarding the allegations raised,” the lawyer’s statement said.

Mr Harris noted that no order or sanctions had been imposed on Mr Leissner by any regulatory authority. MAS said in the statement that it had “served notice of its intention to issue a prohibition order” against Mr Leissner.

Goldman on Friday said that it was co-operating with the MAS, and defended its response to the affair.

“Today’s announcement refers to a matter we discovered in January of this year and identified as a clear violation of the firm’s standards,” it said in a statement. “At that time we promptly took steps to separate Mr Leissner from the firm and reported the matter to regulatory authorities in several jurisdictions, including Singapore.”

The MAS said it had fined StanChart S$5.2m (US$3.65m) for breaches of anti-money laundering regulations with regard to 1MDB-related fund flows. It said that while those regulatory breaches were serious, it had not found pervasive control weaknesses or wilful misconduct at the bank.

StanChart expressed regret “that 1MDB-related transactions passed through Standard Chartered Bank Singapore accounts from 2010 to early 2013”.

The suspicious transactions were reported to authorities before StanChart closed the accounts in early 2013, the bank said, adding that disciplinary action had been taken against individual employees.

Transfers totalling $636m were sent in 2012 from a Swiss bank account to a StanChart account in Singapore held in the name of what US authorities say was a “shell corporation created… to funnel diverted money”. The beneficial owner of the StanChart account was an associate of Mr Low, US prosecutors allege.

The MAS fined Coutts in Singapore S$2.4m for breaches of anti-money-laundering regulations and failing to meet due diligence requirements for politically exposed persons.

These failings were the result of “actions or omissions” of employees who have since left the bank, the MAS said. These employees included Yak Yew Chee and Yvonne Seah, who left Coutts to join BSI bank in Singapore in late 2009.

Mr Yak was convicted of forging documents and failing to report suspicious transactions and jailed for 18 weeks at a Singapore court last month. The court heard that Mr Low was Mr Yak’s most important client at BSI. Mr Low could not immediately be reached for comment.

Royal Bank of Scotland, which is in the process of winding down Coutts after selling the majority of its assets, said: “We regret any failings in our [anti-money-laundering] processes and the length of time it has taken to detect and resolve this issue.”

RBS said Coutts had “progressively and substantially” strengthened the policies and controls used to deter financial crime.

Union Bancaire Privee completed the acquisition of Coutts in Singapore and Hong Kong from RBS in April this year. This was an “assets only” transaction in which UBP did not inherit Coutts’ legal issues or liabilities.

Ravi Menon, MAS managing director, said the central bank’s tough actions for lapses on anti-monetary laundering controls “send a strong signal that we will not tolerate the abuse of Singapore’s financial system for illicit purposes”.

Via FT