Goldman Sachs Hire Came as Bank Pitched 1MDB

By TOM WRIGHT in Hong Kong and JUSTIN BAER in New York
Wall Street Journal
March 10, 2016

Wall Street firm hired daughter of close ally to Malaysian Prime Minister Najib Razak

Goldman Sachs Group Inc. hired the daughter of a close ally to Malaysia’s prime minister around the time the firm’s bankers were pitching business to the country’s government investment fund, people familiar with the matter said.

Goldman is looking into the hiring as part of its investigation into the firm’s actions related to the Malaysia fund and into the Wall Street firm’s former Southeast Asia chairman, Tim Leissner, said one of the people.

The probe is also part of its broader investigation into the hiring of relatives of government officials or other well-connected people, the person said. Goldman is among several international banks under investigation by U.S. authorities to determine whether their hiring practices violated antibribery laws, The Wall Street Journal has previously reported. The Foreign Corrupt Practices Act bans U.S. companies from giving anything of value to a foreign official to gain an unfair advantage or business favors. Goldman has declined to comment on the U.S. probe.

Neither Goldman nor Mr. Leissner have been accused of wrongdoing.

Mr. Leissner was put on leave in January and resigned the next day after a review of his email showed he had allegedly sent an unauthorized reference letter on behalf of an individual to another financial firm, the Journal reported this week, citing people familiar with the matter. That letter allegedly sent by Mr. Leissner also contained inaccuracies, but it wasn’t connected to business Goldman did for the Malaysia fund, the Journal reported.

Goldman has since found that Mr. Leissner separately recommended that the firm hire the daughter of Jamaludin Jarjis, a senior politician and close aide to Malaysia’s prime minister, Najib Razak, as a bank analyst in Singapore in 2010, the person familiar with the matter said. Mr. Jamaludin died last year in a helicopter crash.

The daughter, Anis Jamaludin, worked at the bank for three months, the person said. A LinkedIn account in her name said she was at Goldman from July to November 2010. It was unclear why the time periods differed between the two accounts.

Mr. Leissner’s lawyer is negotiating with Goldman over his access to deferred pay, including restricted shares he was awarded in past years, people familiar with the matter said.

Ms. Anis was hired at Goldman as its bankers were looking for business from 1Malaysia Development Bhd., a government investment fund. The board of 1MDB approved the hiring of Goldman in August 2010 to review the possible purchase of a hydroelectric dam in the Malaysian state of Sarawak, according to 1MDB board minutes. The fund set aside 5 million ringgit (about $1.2 million) for Goldman’s advice, the minutes show.

Ms. Anis went through the same interview process as other candidates and was cleared by Goldman’s legal and compliance departments, people familiar with the matter said. Mr. Leissner wasn’t the main relationship banker with the fund at the time Ms. Anis was hired, one of the people said.

Ms. Anis couldn’t be reached for comment. Real-estate records show Mr. Jamaludin purchased a condominium in 2011 in Boston for $1.9 million that matches an address listed on Ms. Anis’s resume.

Mr. Jamaludin attended college in the U.K. at the same time as Mr. Najib, who heads 1MDB’s board of advisers. At the time of his daughter’s appointment at Goldman, Mr. Jamaludin was a ruling-party politician and Malaysia’s envoy to the U.S. He later returned to Malaysia and was a key strategist for Mr. Najib during elections in 2013, according to a former ruling-coalition politician involved in the campaign. It is unclear if he had any direct role in 1MDB.

The 1MDB fund was used to finance hundreds of millions of dollars of political spending during those elections, which Mr. Najib’s party won, the Journal reported in December, citing a person involved with setting up the fund and 1MDB board minutes. The fund is under scrutiny for its alleged connection to transfers of more than $1 billion into the personal accounts of Mr. Najib.

Malaysia’s attorney general said $681 million of that amount was a legal donation to Mr. Najib by a member of Saudi Arabia’s royal family and most of it was ultimately returned. The attorney general also concluded that there was nothing improper about the donation. Investigators, however, believe the money originated with 1MDB and before much of it was returned moved through a complex web of transactions in several countries, people familiar with the investigations previously told The Wall Street Journal.

Mr. Jamaludin also headed a government affordable-housing program that Mr. Najib launched. The program worked with 1MDB to develop a new residential area in Kuala Lumpur, the capital. Mr. Jamaludin died in a helicopter crash while returning home from a wedding reception for Mr. Najib’s daughter.

The fund didn’t respond to a request for comment. 1MDB has denied wrongdoing and said it would cooperate with corruption probes into the fund that are continuing in at least five countries. Attempts to reach Mr. Najib’s office weren’t successful. He has denied wrongdoing or taking money for personal gain.

Goldman played a key role in raising money for 1MDB. The bank sold a total of $6.5 billion in bonds for the fund in 2012 and 2013, including a $3 billion issuance just two months ahead of the elections. That bond was supposed to finance 1MDB’s plans to develop real estate in Kuala Lumpur, but little construction has occurred.

The bond sales earned Goldman hundreds of millions of dollars in revenue. The bank has defended the unusually high fees, saying it took on large risks by buying all the bonds before selling them to investors.

Apart from concerns over the unauthorized reference letter, Goldman investigators also found Mr. Leissner had offered an internship to the child of someone involved in an Indonesian mining deal that the firm was advising on earlier this year. Goldman was helping a group of investors secure financing to take over an Indonesian copper-mining operation but later resigned due to concerns over the involvement of the individual, the person said.