Report: US Fed told Goldman to tighten risk oversight after dubious 1MDB financing

Report: US Fed told Goldman to tighten risk oversight after dubious 1MDB financing

KUALA LUMPUR,. The US Federal Reserve told Goldman Sachs to be more transparent and report more internal debates about its deals after the investment bank took on US$$6.5 billion (RM27.2 billion) in bonds for 1MDB, the Financial Times (FT) reported.

The British daily further reported that Goldman made sweeping changes in March 2013, especially in regards to its powerful internal committees overseeing operations worked, but added that these reform measures were not publicly disclosed then.

The latest disclosure only adds more questions on the US investment bank’s dubious dealings on 1MDB, especially the involvement of Low Taek Jho, the Penang-born financier who is now wanted to face charges of laundering billions of dollars siphoned from the Malaysian sovereign fund here and in the US.

FT reported that the reform measures affected all of Goldman’s company-wide and regional committees, including its capital and client suitability committees that were in charge of monitoring the 1MDB financing and approve all such deals.

According to the FT, while Tim Leissner, Goldman’s former South-east Asia chairman was the closest person in the bank to 1MDB, it was a partner Andrea Vella ? who was put on leave last month ? that was the most influential figure within the Asia Pacific committee in securing approval for 1MDB as a member of the deal team.

Citing an anonymous person close to Goldman’s Asia Pacific committee, FT reported that Vella was recorded in meeting minutes as having recused himself over the 1MDB financing deals but continued to take an active part in discussions in Hong Kong, which was co-chaired by Goldman’s global chief underwriting officer Eugene Leouzon.

“Tim Leissner and Roger Ng would do the pitch and Leouzon would say, ‘That is interesting,’ then Vella would walk in like a rock star.

“The deal would not have got through without him,” the source was quoted saying.

Vella was co-head of financing for Asia then and later became the continent’s co-head of investment banking.

Roger Ng, known by his Chinese name Ng Chong Hwa, in his home country Malaysia, was another Goldman banker who has been indicted in the US over 1MDB, together with Leissner.

FT said the New York Federal Reserve declined to discuss its supervision of individual banks for this article, adding that Vella and Goldman did not comment.