Most Malaysians haven’t heard of Goldman Sachs much less the financial tyranny that it does throughout the world. This name, the villain behind the curtain is very much silent in most if not all the reports on the 1MDB scams. Being the underwriters for the debts (bonds) it is now very apparent that Goldman Sachs is now the “undertakers” for the dying 1MDB. There is a bigger elephant in the room which very few Malaysians could see. Its the central bank in Malaysia. It pretty much looks like Malaysia have been terrorized by the “Economic Hit Man’
Here are interesting bits of information about that relationship as drawn from Bloomberg’s latest report, “The Scandal That Ate Malaysia”.
KUALA LUMPUR: A Bloomberg article going viral on social media today delves deep into the crisis surrounding 1Malaysia Development Berhad (1MDB) from its inception to the present day.
Amongst many other things, the report traces the relationship between 1MDB and investment banker Goldman Sachs, with whom it was said to have had especially close ties.
Those ties apparently were helped along by Malaysian, Roger Ng, Goldman’s head of Southeast Asia sales and fixed-income trading. Ng, apparently, is well known for his connections to politicians and tycoons.
Tim Leissner, then Goldman Singapore’s co-president for Southeast Asia, played a key role in expanding the bank’s business in Malaysia.
Leisner and his celebrity wife Kimora Lee, are known to have forged a friendship when Prime Minister Najib Razak and wife Rosmah Mansor, and were present at the opening of Khazanah Nasional’s San Francisco office in 2013. Kimora famously tweeted a photo of herself and ‘friend’, Rosmah at the time of the event.
In December 2009, Goldman secured a license from Malaysia’s Securities Commission to set up fund management and corporate finance advisory operations in the country.
Goldman played multiple roles for 1MDB, Bloomberg claims, including acting as advisers in the purchases of energy assets Tanjong Energy, Genting Sanyen Power and Jimah Energy Ventures.
Between 2012 and 2013, Goldman arranged three bond sales for 1MDB, totalling US$6.5 billion. Fees, commissions, and expenses paid to Goldman totalled a whopping US$593 million, or 9.1% of the money raised.
“These transactions were individually tailored financing solutions, the fee and commissions for which reflected the underwriting risks assumed by Goldman Sachs on each series of bonds, as well as other prevailing conditions at the time, including spreads of credit benchmarks, hedging costs, and general market conditions,” Goldman’s Edward Naylor told Bloomberg.
Goldman was also said to have earned US$283 million for arranging 1MDB’s US$3 billion bond sale in 2013, representing 9.4% of the amount raised.
It was in that same year, according to the report, that a Hong Kong-based Goldman Sachs banker met a Korean investor and made an ‘enticing’ presentation regarding 10-year 1Malaysia Development Berhad (1MDB) bonds which offered an interest rate of 4.4%, said to be about 100 basis points higher than other A-minus-rated bonds were yielding at the time.
The potential Korean investor, a veteran in his field, sensed something amiss, the report claims.
With such an attractive yield, he wondered why 1MDB did not just sell its notes directly to institutional investors through a global offering. Not getting the answers which he sought, he decided not to invest in them.
That bond sale, according to Bloomberg, is part of a scandal that has all but sunk 1MDB, rattled investors, and set back Malaysia’s quest to become a developed nation.