Goldman Sachs hit with record $350m fine for 1MDB failings

Goldman Sachs ignored a series of ‘red flags’ in connection with 1MDB, according to the Hong Kong markets watchdog.
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Updated 23 October 2020

Goldman Sachs hit with record $350m fine for 1MDB failings

  • Hong Kong watchdog accuses investment bank of ‘serious lapses and deficiencies’ over $2.6bn wealth fund scandal

HONG KONG: Hong Kong’s markets watchdog on Thursday fined Goldman Sachs’s Asian business $350 million for its role in Malaysia’s multibillion-dollar 1MDB scandal, the largest single fine ever levied by the regulator in the Asian financial hub.

The Securities and Futures Commission (SFC) said serious lapses and deficiencies in management controls at Goldman Sachs (Asia) had contributed to the misappropriation of $2.6 billion raised by the Malaysian sovereign wealth fund.

1Malaysia Development Berhad (1MDB) raised the funds in three bond offerings in 2012 and 2013.

A Goldman Sachs spokesman said the Wall Street bank would issue a statement in due course.

The 1MDB scandal has been a costly and long-running sore for the US investment bank.

In July, Goldman agreed to pay $3.9 billion to settle Malaysia’s criminal probe and this week it is expected to agree to pay more than $2 billion to settle US charges over its role in the scandal.

FASTFACT

$4.5 Billion

Malaysian and US authorities estimate $4.5 billion was stolen from 1MDB in an elaborate scheme that spanned the globe.

Malaysian and US authorities estimate $4.5 billion was stolen from 1MDB in an elaborate scheme that spanned the globe and implicated high-level officials in the fund, former Malaysian Prime Minister Najib Razak, Goldman staff and others.

The three bond offerings, which raised a combined $6.5 billion, were arranged and underwritten by UK-based Goldman Sachs International, with work conducted by deal team members in multiple jurisdictions, who shared the revenue generated.

The SFC said Goldman Sachs Asia, the bank’s Hong Kong-based compliance and control hub for the region, had significant involvement in the origination, approval, execution and sales process of the three bond offerings.

The bank’s Asia hub had earned $210 million from the offerings, the largest share among the various Goldman entities.

“This enforcement action is the result of a rigorous, independent investigation conducted by the SFC,” said Ashley Alder, the SFC’s CEO.

The 1MDB bond deals were obtained for Goldman by its banker Tim Leissner, who in August 2018 admitted that he had conspired with Malaysian financier Jho Low and others to pay bribes and kickbacks to Malaysian and Abu Dhabi officials to obtain and retain the business from 1MDB for the bank.

US court documents show Low was rejected as a private wealth management client on several occasions as his source of wealth could not be verified, resulting in a potential money laundering risk.

Nonetheless, Goldman’s regional and firm-wide committees that vetted the bond offerings accepted Leissner’s false assertions that Low had no roles in the bond offerings without making further inquiries, the SFC said.

“Apart from the involvement of Low, there were a number of red flags present in the bond transactions which should have called for a closer examination of the corruption and money laundering risks involved,” its statement of disciplinary action said.

These included the fact that the amount raised far exceeded the actual needs of 1MDB, and the sovereign wealth fund’s willingness to pay high fees and repeated emphasis on confidentiality and speed of execution, the SFC said.


Saudi visa processing centers reopen across the Kingdom

Updated 2 min 21 sec ago

Saudi visa processing centers reopen across the Kingdom

  • Nearly 75% of Visa Application Centers have restarted operations since the disruption caused by COVID-19

RIYADH: Ahead of international travel restarting in Saudi Arabia next year, centers for processing work and travel visa applications have begun to re-open for business across the Kingdom, after the disruption caused by the impact of the coronavirus (COVID-19) pandemic.

“We have seen a gradual rise in the number of our Visa Application Centers (VACs) re-opening globally, including Saudi Arabia, which has been very reassuring for us. Out of 28 governments that we serve in the Kingdom, we have resumed operations for 20 countries as of November 2020,” Sumanth Kapoor, regional head for Saudi Arabia at VFS Global, told Arab News.

VFS Global is the world’s largest visa outsourcing and technology services specialist for governments and diplomatic missions worldwide. Headquartered in Switzerland, the company has 3,430 VACs in 144 countries across five continents, and as of September 2020 it has processed more than 225 million applications.

Kapoor said that while VFS Global’s business has begun to return to normal, it was important to note that the official re-opening of VACs is dependent on approval from both local authorities and the embassy in question.

Furthermore, being able to apply for a visa does not necessarily mean that an applicant will automatically be able to travel to their desired country. “We suggest that all travellers check official government advisories of the destination country and airlines’ requirements, so they are aware of the current status concerning international travel,” he said.

Ahead of all centers reopening, the company earlier this summer launched a new service called Visa At Your Doorstep (VAYD), where a VFS Global executive travels to an applicant’s home to process the visa application documentation and carry out the biometrics.

Kapoor said the VAYD service was an example of how their business has adjusted to the challenges presented by COVID-19. “Health and safety before and during travel will play a much more critical role, and we are observing a gradually changing customer requirement trend towards more personalized, digital and at-your-doorstep services,” he said.

“Although we have reopened around 75 percent of the VACs across the country, the circumstances are new to everybody involved — customers, client governments, local authorities and ourselves,” he added.

On which countries are proving most popular with Saudis for visas, Kapoor said it was difficult to identify specific trends: “Europe has always been a favorite travel destination for Saudis. However, because of the unprecedented events this year, trends within the Kingdom are not as conclusive as previous years.”

While Saudi authorities are planning to reopen international borders at the end of the year, Kapoor said that freedom to travel would still be constrained: “Travel plans also depend on the quarantine rules and flight availability of the destination country.”

VFS Global’s offices overseas have begun accepting applications from those wanting visas to travel to the Kingdom. 

“We have started accepting visa applications for all available categories, with the exception of Tourist Visa. Our centers are accepting applications for biometric enrolment which is a mandatory step for all work visa applicants,” Kapoor said.

Despite disruption to services as a result of COVID-19, Kapoor said its passport processing services had not been significantly affected. “Throughout the recent difficulties, there has not been significant impact on our passport and consular services that we offer to Indian and Philippine citizens in the Kingdom,” he said.

“Our centers offering passport and consular services have remained operational even during the pandemic with all safety and preventative measures in place.”

In addition, the company also conducted special tours around the Kingdom to collect Indian passport renewal applications in various cities and towns, due to the high demand from Indian nationals. These took place in Bisha, Jizan, Madinah and Najran in the western region, as well as in Sakaka, Arar, Hafr Al Batin, Khafji and Wadi Dawasir.


VFS GLOBAL FAQS

To outline the changes implemented as a result of COVID-19, VFS Global has compiled the following frequently asked questions:

1. Do I need to bring a COVID 19-related medical certificate when I visit the Visa Application Center? 

VFS Global does not seek any COVID-19-related medical certificates. Medical certificates may be required for visa applications for some countries as per the official checklist.

2. If the visa I received for a country before lockdown has expired, do I need to apply again? 

Yes, if your visa has expired for any country, or is due to expire soon, you may need to re-apply for a new visa for that particular country. If you are already in a foreign country and your visa is due to expire, go to the relevant visa or immigration authorities of that country for assistance.

3. Can I apply for my visa at my home or office to maintain physical distancing precautions? 

Yes. Choose our Visa At Your Doorstep service for a convenient visa application process from the safety and comfort of your home or office. Available for select destination countries.

4. Do I need to follow health, safety and physical distancing norms at the Visa Application Centers? 

Yes. For your safety and that of our employees, it is important to adhere to the health and safety guidelines issued by local health authorities such as temperature checks, physical distancing and other safety norms.

5. Can I ask for my passport to be delivered to my address?

Yes. You can choose our optional Courier Service to get your passport delivered to your doorstep for any new visa applications submitted at re-opened centers.