This article first appeared in The Edge Financial Daily on December 19, 2019

KUALA LUMPUR: Former prime minister Datuk Seri Najib Razak is said to have received money raised from bonds issued by 1Malaysia Development Bhd (1MDB), according to documents released by the US Securities and Exchange Commission (SEC) in relation to its settlement with  former Goldman Sachs Group Inc executive Tim Leissner.

The SEC investigation was conducted with assistance from various authorities in the US, the Monetary Authority of Singapore, the Securities Commission Malaysia, and the Securities and Futures Commission of Hong Kong.

In a statement, the SEC said Leissner consented to the findings detailed in an administrative and cease-and-desist order, which revealed that Najib and his senior government officials got bribes and kickbacks from Leissner in 1MDB’s bond deals in 2012 and 2013.

“Although the purported purpose of the approximately US$6.5 billion raised by the three bond transactions was to support 1MDB projects for the benefit of the Malaysian people, Leissner and others instead planned and executed a scheme to misappropriate more than US$2.7 billion and distribute the money as bribes and kickbacks to government officials in Malaysia and Abu Dhabi, including but not limited to Najib Razak, as well as to other participants of the scheme and their families, including Leissner,” the SEC said in the order.

It said Leissner and other Goldman Sachs senior executives actively worked to obtain and retain business from 1MDB in 2012 and 2013 for the benefit of Goldman Sachs via the promise and payment of bribes and kickbacks to government officials in Malaysia and Abu Dhabi using, in part, embezzled proceeds from the bond deals.

During this time, through the course of the scheme, the SEC said Leissner and others paid millions of dollars in bribes and kickbacks to government officials, and obtained 1MDB business for Goldman Sachs, in particular, the three bond deals, which Goldman Sachs referred to, internally, as “Project Magnolia”, “Project Maximus” and “Project Catalyze”.

“Leissner also knew at the time that Najib Razak and government officials from Abu Dhabi and 1MDB officials would receive money from the proceeds of Project Maximus that passed through various shell companies beneficially owned and controlled by himself, [Jho] Low (Low Taek Jho) and others.

“Moreover, along with [Jho] Low and others, it was Leissner’s intended purpose that the payments were to flow to these government officials to influence the officials to execute the bond transaction with Goldman Sachs. A close relative of Najib Razak and a senior official of the Middle Eastern sovereign wealth fund, among others, received some of these funds,” the SEC said.

Following the closing of Project Catalyze, through the end of 2014, the SEC said Leissner and Goldman Sachs sought, obtained and worked to execute several more transactions with 1MDB, particularly focusing on a proposed initial public offering (IPO) of 1MDB’s energy assets.

During these additional transactions, Leissner and other participants found to be in the scheme continued to pay bribes and kickbacks to “certain Malaysian government officials”, including from proceeds of Project Catalyze and other 1MDB transactions, to influence them to award a role for Goldman Sachs in the IPO.

“These bribes and kickbacks included transferring millions of dollars to the accounts of shell companies beneficially owned and controlled by 1MDB officials, and transferring approximately US$1.3 million to the account of a New York jeweller to pay for jewellery for the spouse of Najib Razak,” it said.

It also said on 1MDB’s formation, Najib assumed a position of authority in 1MDB, with the authority to approve all appointments and removals in its board of directors and senior management team. “In addition, any financial commitments by 1MDB, including investments, that were likely to affect a guarantee given by the government of Malaysia for the benefit of 1MDB or any policy of the Malaysian government, required the approval of Najib Razak,” it said.