4 ms·

As much as I dislike GS, I find their interpretation of the story to be far more believable. US government is a paragon of honesty and virtue compared to a lot

by m0zg 8y ago

As much as I dislike GS, I find their interpretation of the story to be far more believable. US government is a paragon of honesty and virtue compared to a lot of foreign governments. Stealing government money is the main goal of those who "serve" in those governments, with the actual job description coming in a distant second or third. GS should have known this would backfire, it's not like they didn't know the money would immediately disappear into the pockets of government officials. They probably counted on those officials not being quite so brazen as to turn around and sue GS.

ReptileMan 8y ago
It is not the same officials. It is the new administration that is trying to claw back the money.
taherchhabra 8y ago
Malaysia was a single party democracy since it's independence, the probability of new party coming into power was very very low since all the democratic institutions like election commission, judiciary were almost destroyed by the previous regime, so based on this GS would have done their risk/reward calculation. But this May, another party came to power and currently the previous prime Minister and lot of officials are charged for corruption in 1MDB.
- n-gatedotcom 8y ago
  You should make a parent comment out of this because this puts the whole thing in a new light
- drharby 8y ago
  I did not know that their was a changing of the guard. That explains more
sct202 8y ago
I read the Billion Dollar Whale book about the scandal and there are a lot of references to western/global financial companies sending up red flags about 1MDB for years and years, but then some companies (or parts) would turn their head for a contract. Goldman Sachs private banking wouldn't give Jho Low (the apparent mastermind behind it all) a private banking account b/c they thought he was going to launder money through it. 1MDB fired one of the Big 4 auditors every year, because their books were shady. Giant investment firms like Goldman Sachs do their own due diligence before entering in any deals. They did several deals with 1MDB over the years, and the corruption should have been obvious earlier if they actually cared to check for it.
- adrr 8y ago
  Goldman knew 1MDB was doing something corrupt. Other parts of Goldman didn't want to do business with 1MDB. Goldman looked away because 1MDB paid $700MM for some bonds that should have cost $3MM to issue. No government entity would pay 10% to create some bonds.
travisoneill1 8y ago
GS made about 10% on this deal which is an order of magnitude more than market. This almost certainly means that either it was not shopped to other banks or that the other banks wouldn't touch it with a 10 foot pole. So while it's probably true that they lied to GS it was with a wink.
- adrr 8y ago
  According to the book billion dollar whale, the average price to create an relase of government backed corporate bonds was $1 million in fees. 1mdb did 3 rounds of bonds so it should of cost $3 million. 1mdb paid $700mm.
  - kenneth 8y ago
    Supposedly, they bought the bonds on their balance sheet before selling them because 1mdb wanted the money fast, giving them an order of magnitude more risk, hence the higher fees. Also, the average fees for a bond issuance might be $1m because most bond issuances are small. It's usually higher on a percentage basis.
mmsimanga 8y ago
I agree with you. I venture this has always been the case with a lot of leaders/kings and governments. The problem we face in the current age is that things have been automated and so much power is vested in a few individuals. A few individuals working for the Energy utility of country or the rail governing body can do massive damage by being corrupt. I really worry Africa will never develop because we have very few individuals making such bad decisions that the whole country gets affected. South Africa is reeling with power cuts because of the decisions of a few individuals[0][1]. Just to make my point clear, a few decades ago (in Africa), we didn't have electricity (quite a lot still don't) we used candles and lamps. Apart from shutting down a candle factory, there wasn't much an individual could do to affect the whole country (other factories can open and candles can be imported). Now we use electricity for lighting and it is provided by one government-owned entity. It makes the head of the entity very powerful giving him/her access to billions and billions of dollars. They also able to screw the whole country up. [0]http://www.702.co.za/articles/329758/sorry-south-africa-for-the-damage-we-are-causing-to-the-economy-eskom http://www.702.co.za/articles/329758/sorry-south-africa-for-... [1]https://mg.co.za/article/2018-01-12-00-eskom-has-a-problem-a-r20-billion-problem https://mg.co.za/article/2018-01-12-00-eskom-has-a-problem-a...
hrasyid 8y ago
> I find their interpretation of the story to be far more believable I don't think the Malaysian prosecutors are disputing that the (previous) Malaysian government was corrupt. They arrested Najib Razak (the PM during the 1MDB project), as well as other officials. But they're also saying that GS has a partial responsibility. And given the numbers provided in the news article I don't find it hard to believe.
- m0zg 8y ago
  My more cynical take: the current government is also corrupt, and GS won't do their money laundering anymore. So they'll take $7.5B from it (if they figure out how) and then it will also disappear into their pockets. Just watch.
  - acct1771 8y ago
    Any reason to believe this, or just Devil's advocating?
    - m0zg 8y ago
      Because there's simply no way an honest person will ever become a member of that government. And even if, by miracle, they do, the pay is so laughably bad, they won't be able to survive, let alone prosper. The entire structure of the government is based on the "understanding" that money will just "disappear" from time to time. Merely changing the top bosses changes nothing, and if anything the new ones have a more ravenous appetite. I know it might be difficult for US or Canadian natives to understand this. But people from most of the rest of the world know exactly what I'm talking about.

by m0zg 8y ago

ReptileMan 8y ago

It is not the same officials. It is the new administration that is trying to claw back the money.

taherchhabra 8y ago

Malaysia was a single party democracy since it's independence, the probability of new party coming into power was very very low since all the democratic institutions like election commission, judiciary were almost destroyed by the previous regime, so based on this GS would have done their risk/reward calculation. But this May, another party came to power and currently the previous prime Minister and lot of officials are charged for corruption in 1MDB.

n-gatedotcom 8y ago
You should make a parent comment out of this because this puts the whole thing in a new light
drharby 8y ago
I did not know that their was a changing of the guard. That explains more

sct202 8y ago

I read the Billion Dollar Whale book about the scandal and there are a lot of references to western/global financial companies sending up red flags about 1MDB for years and years, but then some companies (or parts) would turn their head for a contract. Goldman Sachs private banking wouldn't give Jho Low (the apparent mastermind behind it all) a private banking account b/c they thought he was going to launder money through it. 1MDB fired one of the Big 4 auditors every year, because their books were shady. Giant investment firms like Goldman Sachs do their own due diligence before entering in any deals. They did several deals with 1MDB over the years, and the corruption should have been obvious earlier if they actually cared to check for it.

adrr 8y ago
Goldman knew 1MDB was doing something corrupt. Other parts of Goldman didn't want to do business with 1MDB. Goldman looked away because 1MDB paid $700MM for some bonds that should have cost $3MM to issue. No government entity would pay 10% to create some bonds.

travisoneill1 8y ago

GS made about 10% on this deal which is an order of magnitude more than market. This almost certainly means that either it was not shopped to other banks or that the other banks wouldn't touch it with a 10 foot pole. So while it's probably true that they lied to GS it was with a wink.

adrr 8y ago
According to the book billion dollar whale, the average price to create an relase of government backed corporate bonds was $1 million in fees. 1mdb did 3 rounds of bonds so it should of cost $3 million. 1mdb paid $700mm.
- kenneth 8y ago
  Supposedly, they bought the bonds on their balance sheet before selling them because 1mdb wanted the money fast, giving them an order of magnitude more risk, hence the higher fees. Also, the average fees for a bond issuance might be $1m because most bond issuances are small. It's usually higher on a percentage basis.

mmsimanga 8y ago

I agree with you. I venture this has always been the case with a lot of leaders/kings and governments. The problem we face in the current age is that things have been automated and so much power is vested in a few individuals. A few individuals working for the Energy utility of country or the rail governing body can do massive damage by being corrupt. I really worry Africa will never develop because we have very few individuals making such bad decisions that the whole country gets affected. South Africa is reeling with power cuts because of the decisions of a few individuals[0][1]. Just to make my point clear, a few decades ago (in Africa), we didn't have electricity (quite a lot still don't) we used candles and lamps. Apart from shutting down a candle factory, there wasn't much an individual could do to affect the whole country (other factories can open and candles can be imported). Now we use electricity for lighting and it is provided by one government-owned entity. It makes the head of the entity very powerful giving him/her access to billions and billions of dollars. They also able to screw the whole country up. [0]http://www.702.co.za/articles/329758/sorry-south-africa-for-the-damage-we-are-causing-to-the-economy-eskom http://www.702.co.za/articles/329758/sorry-south-africa-for-... [1]https://mg.co.za/article/2018-01-12-00-eskom-has-a-problem-a-r20-billion-problem https://mg.co.za/article/2018-01-12-00-eskom-has-a-problem-a...

hrasyid 8y ago

> I find their interpretation of the story to be far more believable I don't think the Malaysian prosecutors are disputing that the (previous) Malaysian government was corrupt. They arrested Najib Razak (the PM during the 1MDB project), as well as other officials. But they're also saying that GS has a partial responsibility. And given the numbers provided in the news article I don't find it hard to believe.

m0zg 8y ago
My more cynical take: the current government is also corrupt, and GS won't do their money laundering anymore. So they'll take $7.5B from it (if they figure out how) and then it will also disappear into their pockets. Just watch.
- acct1771 8y ago
  Any reason to believe this, or just Devil's advocating?
  - m0zg 8y ago
    Because there's simply no way an honest person will ever become a member of that government. And even if, by miracle, they do, the pay is so laughably bad, they won't be able to survive, let alone prosper. The entire structure of the government is based on the "understanding" that money will just "disappear" from time to time. Merely changing the top bosses changes nothing, and if anything the new ones have a more ravenous appetite. I know it might be difficult for US or Canadian natives to understand this. But people from most of the rest of the world know exactly what I'm talking about.