It's All Fun and Games Until Someone Gets Hurt: Lessons on FCPA Enforcement From The Goldman Sachs and 1MDB Scandal
In October 2020, the Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) announced the largest Foreign Corrupt Practices Act (“FCPA”) enforcement action of all time against Goldman Sachs, the parent company of Goldman Sachs Malaysia and a first-time FCPA violator, at $1.66 billion. This enforcement action made a statement, and it signals where the Agencies may take future FCPA enforcement actions.
For about five years, two Goldman Sachs Malaysia executives, Tim Leissner and Ng Chong Hwa (“Roger Ng”), conspired to provide corrupt payments to foreign officials in Malaysia and the United Arab Emirates (“UAE”), and more specifically, foreign officials in Abu Dhabi. Their desire to obtain business from 1Malaysia Development Berhad (“1MDB”) led to about $1.6077 billion being siphoned out of a sovereign wealth fund meant to help the Malaysian people that instead went to pay bribes to foreign officials and foreign officials’ relatives. After bribing foreign officials to provide services, like underwriting three 1MDB bonds, advising 1MDB on an acquisition, and helping the company evaluate a possible initial public offering (“IPO”), Goldman Sachs made $606 million in fees and revenue Goldman Sachs wired payments that passed through the Eastern District of New York.
Low Taek Jho, also known as Jho Low (“Low”), worked with the two Goldman Sachs executives to siphon off money from 1MDB. As a result, Leissner, Ng, and Low violated U.S. money laundering laws. Low used the money to buy real estate, throw parties on yachts with celebrities, and fund movies like The Wolf of Wall Street and Dumb and Dumber To. He also used some of the money to throw an extravagant thirty-first birthday party in the Chairman Suite at the Palazzo in Las Vegas, which costs $25,000 per night. Leonardo DiCaprio, Kim Kardashian, and several Goldman Sachs bankers—including Tim Leissner—attended Low’s birthday bash. Low even reportedly paid “a six-figure sum” to have Britney Spears serenade Low with “Happy Birthday.” The money once meant to help promote growth, prosperity, and economic development for the Malaysian people did not find its way there.
This Note explores what the DOJ and SEC’s enforcement in the Goldman Sachs and 1MDB scandal reveals about FCPA enforcement. Part I describes the back-ground of the FCPA and the current trends of FCPA enforcement. Part II describes the Goldman Sachs and 1MDB scandal in greater detail—focusing on the key players, what happened, and the indictments. Part III explores how the Goldman Sachs scandal informs trends in FCPA enforcement. Finally, this Note provides concluding thoughts on the scandal.Subscribe to ACLR