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Malaysia, anti-corruption, bankers

When Will Bankers Be Held Accountable?

In Malaysia, while kleptocrats are not above the law, it seems that top bankers are.

Words: Frank Vogl
Pictures: Ishan

Malaysia’s former Prime Minister Najib Razak was jailed on Aug. 23, 2021. He sought and failed to delay a final appeal decision to his country’s highest court. He stole hundreds of millions of dollars and now faces up to 12 years behind bars for his key roles in one of the largest-ever international cases of corruption and money laundering.

However, the top bankers who provided the cash that he and his cronies stole are not facing jail, let alone prosecution. Goldman Sachs — the bank that played the central role in the financial conspiracy — was sanctioned by a host of national authorities and forced to commit to paying a total of over $5 billion in fines. For some of the world’s largest banks, such fines seem to be just the costs of doing business. The top bankers continue to pocket huge compensation, including spectacular bonuses.

The culture that pervades Wall Street and so much of the financial industry places short-term profit maximization, which leads to boosts in personal compensation, far above other values, such as integrity. Greed prevails. The risks of going beyond legal boundaries — such as using bribes to win business deals — appear to be ones that too many top bankers accept. And if they get caught, their institutions simply pay the fines.


Razak, a one-time golfing buddy of former president Donald Trump, was brought down by massive public protests in Malaysia that led his former patron and mentor, former Prime Minister Mahathir bin Mohamad, to turn against him and secure his electoral defeat. The case against Razak was built by a precedent-setting development in the annals of anti-corruption — intense cross-border cooperation between official investigating authorities from Malaysia, Switzerland, the United Kingdom, Singapore, Luxembourg, Hong Kong, and the United States.

For some of the world’s largest banks, large fines seem to be just the costs of doing business. The top bankers get spectacular bonuses while continuing to impoverish poor people.

Most kleptocrats act as if they are above the law and succeed in capturing the institutions of justice and repressing critics. But when there are sustained anti-corruption mass public demonstrations and some honest judges, then even kleptocrats can be felled. In this respect, Razak is now a member of an elite group of rascals. Well-organized and persistent public demonstrations triggered by outrage over corruption brought down former South Korean President Park Geun-hye, who spent five years in prison; they forced former President Viktor Yanukovich to flee to Russia as citizens of Ukraine succeeded with their revolution in 2014; and, then there is ousted South African President Jacob Zuma who may well face jail for crimes of “state capture.”

What is especially remarkable about Razak’s corruption is that unlike Park, Yanukovich, and Zuma, the theft of public funds was not due to domestic conspiracies with local cronies and the plunder of domestic state assets. Instead, it arose from a scheme to steal cash raised from global investors in several international bond issues. Razak and his cronies were at the center of the scheme, under which $6.5 billion in bonds was raised, with executives at Goldman Sachs siphoning off $1.6 billion to pay bribes to officials in Malaysia and Abu Dhabi to win business contracts. A further approximately $3 billion went missing, with Razak alone having been accused in his trial of pocketing over $700 million.

It is hard to believe that the top executives at the Wall Street bank were unaware of the $6.5 billion bond underwriting deal for one client (the cash was officially raised for the national development agency 1Malaysia Development Bhd, also called 1MBD), or the “red flags” warning of concerns that some officials at the bank raised when the deal was first proposed by two of the bank’s Asian executives. Details of the case were described in the official indictments released by the US Department of Justice.

The Department of Justice fined Goldman Sachs as did the Securities and Exchange Commission, the Federal Reserve Board, and the authorities in the United Kingdom, Singapore, and Malaysia. Two of the bank’s executives, Asian manager Tim Leissner and his associate Ng Choing Hwa, were prosecuted and are awaiting sentencing now in the United States, although no charges were brought against any of the top echelons of the bank’s executives. But none of the indictments of Goldman Sachs related to the 1MDB crimes mention the bank’s chairman and CEO David Solomon, who settled all the cases brought against the bank, or his predecessor, Lloyd Blankfein, who ran the bank when it started work on the deals and floated the bond issues between 2009 and 2014. To resolve just the cases brought against the bank by the Department of Justice, Solomon admitted guilt and agreed that Goldman Sachs pay a fine of $2.9 billion.

In another precedent-setting aspect of the whole affair, the Goldman Sachs board of directors stated — after paying all the fines to various authorities in October 2020 — that although none of the top officers of the firm was directly involved in the scandal, there were management failures. Accordingly, the board determined to claw back $98 million in payments to the bank’s current and former top managers. Yet, exactly one year later, the bank announced special bonuses of $30 million for Solomon and $20 million for his deputy, Chief Operating Officer John Waldron. These payments underscore that the leadership of the bank has assigned the scandal to the history books, and continues, as in the past, to focus entirely on the maximization of top executive compensation.


There is a clear imbalance. The thieves, like Razak, even if they held the highest political offices in their countries, go to jail if effective investigations, public demonstrations, and an honest judiciary prevail. The message that Malaysia’s judges are sending is that no individual, even a formidable former prime minister, is above the law.

But the days of “Occupy Wall Street” are long gone and there is no public outcry, let alone mass public demonstrations, against criminal acts perpetrated by some of the largest banks in the world that result in impoverishing poor people. The victims, in this case, are the millions of Malaysian citizens who should have benefited from the funds raised by the national development agency.

The lead enablers in giant global money laundering and corruption schemes, the banks, pay fines and move on. Some of the world’s largest banks have been fined multiple times for crimes that have left countless victims in their wake, from massive frauds associated with the sub-prime mortgage scandals of a decade ago, to tax evasion schemes, to rigging international interest rate markets, to bribing foreign government officials. In this case, the chairman of  Goldman Sachs rakes in massive annual compensation while former top executives luxuriate in their retirement homes, no doubt counting their large pensions, while their political co-conspirators — such as Razak, who is 69 — spend their declining years in a cell.

The culture that creates the kind of behavior illustrated by Goldman Sachs in the Malaysian case needs to change. The ideal would be voluntary changes by the banks themselves, as the Group of Thirty, a leading association of former finance ministers and financial leaders, has advocated. The Treasury and Justice Departments across North America and Western Europe need to have greater budgets to ensure far more effective enforcement of existing anti-corruption and anti-money-laundering laws. There is also a need to have new beneficial ownership regulations, as called for in the US Corporate Transparency Act, that would make it easier for the authorities to discover the true owners of holding companies that are used to hide stolen assets. Finally, there need to be laws that make it far more probable that when banks pursue criminal activities on the scale seen in the Malaysian case that the top bank executives face prosecution and possible jail.

In sum, conditions need to be established that make the risks of facing justice by bankers and other enablers for crimes of corruption far greater than is presently the case. But is there any political will for this kind of accountability?

Frank Vogl wrote “The Enablers: How the West Supports Kleptocrats and Corruption – Endangering Our Democracy,” co-founder of the leading global organization fighting corruption, Transparency International, and the chairman of Partnership for Transparency Fund. Frank Vogl is an Adjunct Professor at Georgetown University.

Frank Vogl

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