Your beloved ah gong wasn't much of a pure saint either, sitting pretty in Tanjong Pagar GRC while Indranee did all his dirty work.
Good riddance to bad rubbish. Ptui!
pure greed is also considered?
PURE GREED & CORRUPTION: Goldman Sachs in hot seat after helping Najib & Jho Low
An unfolding political scandal in Malaysia is starting to reverberate far from Kuala Lumpur to the downtown New York headquarters of Goldman Sachs. State fund 1Malaysia Development Berhad (1MDB) is at the centre of allegations of graft and mismanagement. The furore has prompted renewed scrutiny of hefty fees the Wall Street bank led by Lloyd Blankfein earned selling bonds for 1MDB. The affair threatens to expose a blind spot in Goldman’s processes for vetting sensitive deals.
The latest uproar was triggered by reports that almost $700 million landed in the personal accounts of Najib Razak, Malaysia’s Prime Minister. Najib denies taking any money from 1MDB for personal gain. The country’s anti-corruption commission says the funds came from an unnamed donor.
Even so, the investigations into the source of Najib’s mystery money have intensified questions about the management of the fund, which borrowed heavily to buy power assets and finance investments in recent years, but is now effectively being wound down.
Goldman helped 1MDB raise a total of $6.5 billion from three bond issues in 2012 and 2013. Even at the time, the deals were controversial because they were so lucrative for the bank. Goldman earned roughly $590 million in fees, commissions and expenses from underwriting the bonds, according to a person familiar with the situation – a massive 9.1 percent of the total raised. That was almost four times the typical rate for a quasi-sovereign bond at the time. It exceeds what Wall Street firms can charge in what has traditionally been their most lucrative work: taking companies public in the United States.
Goldman was able to book hefty fees because it put its balance sheet at risk for 1MDB, which did not yet have a credit rating. And it wanted to raise a large amount of money very quickly. Yet the bonanza has left the bank exposed to its client’s woes. Malaysian opposition politician Tony Pua said earlier this year that 1MDB had been “royally screwed” by the deals.
This is precisely the type of situation Goldman had hoped to avoid when it overhauled its processes for approving transactions in 2011. Bruised by post-crisis revelations about structured products that blew up and a $550 million fine from the US Securities and Exchange Commission, the bank’s Business Standards Committee introduced systems for weighing reputational risks alongside purely financial ones. Business with governments is subject to a more comprehensive review.
The fact that Goldman’s assignments for 1MDB cleared those internal hurdles implies they are far from foolproof. There’s no suggestion that the bank knew of any funny business at 1MDB. Even so, that a government-linked vehicle was so eager to engage in inexplicably expensive fundraising should have sounded alarm bells. In hindsight, Goldman must surely regret going ahead with the hurried trades. Now it needs to ponder why its vaunted new controls failed to weed them out.
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. – Reuters
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