Armstrong Economics Blog/Corruption
Re-Posted Nov 5, 2018 by Martin Armstrong
The U.S. Justice Department’s charges against individuals related to the pillaging of the Malaysia investment fund known as 1MDB offers several new insights into the global, multibillion-dollar scandal. But there is something the press is overlooking. The senior Goldman Sachs banker in Asia who pleaded guilty to U.S. bribery and money laundering charges and his deputy was arrested in Malaysia, was brought by federal prosecutors in Brooklyn, not the Manhattan Southern District of New York which the bankers own right down to the foundation stones. The Brooklyn prosecutors have laid out conspiracy allegations related to Goldman Sachs’s lucrative fundraising for Malaysian wealth fund 1MDB. The fact that he has already pled guilty means he has a cooperation deal to give up more infor on the inside of Goldman Sachs.
This entire scandal came in right on target in May 2018. It resulted in the political overthrow of the president and the new finance minister discovered computers that even the highest-ranking bureaucrats could not access when they got into the government offices. Computers were set up to prevent access by anyone other than one or two people. Evidence of massive corruption was what turned the election on May 9th, 2018.
I have been writing that ALL my sources from Asia to the Middle East pointed to outright corruption in Malaysia and the deep involvement of Goldman Sachs. I knew dealers who bid on the project and found it went to Goldman when it made no economic sense. The “feeling” in the trading rooms was plain and simple – something was seriously WRONG!!!!
Goldman Sachs’ role, I wrote back in 2015, had been highly criticized in the Malaysian media and political circles after it emerged that 1MDB sovereign wealth fund paid hundreds of millions of dollars to the bank for helping it raise $6.5 billion in three bond deals in 2012 and 2013. Goldman Sachs earned around $590 million in fees plus commissions and expenses from underwriting the bonds, according to Reuters. The reported fees are highly excessive, nearing 10% when such fees are typically only 1% in bond underwriting.
Since May 2018, there was talk about filing suit against Goldman Sachs for its role in this scandal. I warned that filing a lawsuit against them in New York City where they own the courts had little chance of success and Goldman knew that. I had a discussion with a New York lawyer and asked bluntly why the bankers never get changed in Manhattan. The reply with a chuckle was also – “You don’t shit where you eat!”
These criminal charges were not brought by Southern District of New York, but by the prosecutors across the river in Brooklyn. Donald Trump should launch an investigation against the courts in Manhattan just as Franklin D. Roosevelt did back in 1931 with the Seabury Investigations. The political corruption in New York City is pervasive. The press will not write about it and everything remains hidden. Just perhaps the competition of Brooklyn against Manhattan may open a crack through which some light may appear.
I wrote back in 2015 about this scandal we all knew about behind the curtain. I even wrote that the financial mess even touched the UAE in the mix through IPIC which was established back in the 1980s to focus on energy investments. In 2016 I wrote that the Federal Reserve was preparing an enforcement action against Goldman Sachs related to confidential government information that was leaked from the Fed to one of its bankers. I also wrote that Swiss prosecutors said they were helping the U.S. on the investigation. The Swiss also opened their own criminal proceedings in August 2015, against two former officials of the fund on a string of corruption charges. Their investigation has since been extended to other officials as well.
The question is WHY did the Manhattan prosecutors sit on their hands? Why did it take Brooklyn to bring charges?