BROOKLYN (CN) — A long-awaited trial on a record-shattering global financial scandal will open Monday in New York. The case is expected to test the U.S. government's role in taking on foreign corruption.
Ng Chong Hwa, who goes by Roger, is accused of conspiring to bribe Malaysian government officials and launder billions of embezzled dollars that rightfully belonged to a fund 1MDB, short for 1Malaysia Development Berhad.
Initially set up to spur economic development in Malaysia, the corrupted fund was robbed of at least $4.5 billion in a scheme that went up all the way up to the former prime minister, investigators say — and the money was used for lavish purchases like artwork, jewelry and real estate properties.
Ng was Goldman’s head of investment banking in Malaysia. He was extradited to the United States in 2019 and pleaded not guilty to the federal charges against him: two counts of conspiracy to violate the Foreign Corrupt Practices Act and one to commit money laundering.
Jury selection concluded on Tuesday in the Eastern District of New York. If convicted on all three counts, Ng faces up to 25 years in prison.
Legal minds say the trial will address the United States’ role in monitoring international business practices.
“It's not easy in this global economic world to make people play by the rules,” said Laurie L. Levenson, a Loyola Law School professor and former prosecutor. “A case like this is designed to send a message to other multinational businesses that you are going to be held responsible under this law.”
Double-dealing in 1MDB
Ex-Malaysian Prime Minister Najib Razak set up the 1MDB fund after taking office in 2009, touting it as a way to promote economic development in the country. In reality, Najib raided the fund, with $700 million ending up in the disgraced leader’s own bank accounts in addition to the luxury goods bought with the money laundered by his associates.
Najib, who served from 2009 to 2018, was sentenced to 12 years in prison on corruption and money laundering charges. He is out on bail and faces four additional trials related to 1MDB.
Meanwhile, domestic investigations into the 1MDB fund have produced multibillion dollar settlements in recent years.
Goldman Sachs paid nearly $3 billion as part of a deferred prosecution agreement related to the 1MDB scandal, while Goldman Sachs Malaysia pleaded guilty to violating anti-bribery provisions of the Foreign Corrupt Practices Act.
The former Southeast Asia chairman and participating managing director of Goldman Sachs, Tim Leissner, pleaded guilty to violating the same statute and laundering more than $2.7 billion diverted from 1MDB. Ordered to forfeit $43.7 million, he will be sentenced later this year and is expected to testify against Ng.
Low, also known as Low Taek Jho, is well-known for extravagantly spending what is said to be looted 1MDB money, buying luxury real estate in Manhattan and Beverly Hills and helping to finance Hollywood movies like "The Wolf of Wall Street."
The United States has seized from Low paintings by Vincent van Gogh and Claude Monet, a Marlon Brando Oscar, and a $250 million yacht. Supermodel Miranda Kerr surrendered $8 million in jewelry gifted to her by Low. The pair previously dated.
Defending Roger Ng
If details about the fugitive Low are presented at trial, it could boost Ng’s case as a scapegoat for unlawful corporate activity, legal experts said.
“I think it helps Ng if he gets mentioned,” said David S. Weinstein, a white-collar criminal defense attorney and former prosecutor. “That allows you to point the finger at the empty chain of the person who’s not there.”
Ng’s chair, meanwhile, will be occupied.
“He’s here, he’s facing the music, he’s answering the charges,” Weinstein noted, contemplating potential defense arguments.
Ng’s attorneys may also take aim at his former employer. “Goldman Sachs can be the big villain in all this,” Weinstein said. “They cut themselves a sweetheart deal; they’ve thrown Ng under the bus.”
Marc Agnifilo, of the firm Brafman & Associates, represents Ng. In a motion to dismiss that was ultimately denied by Chief U.S. District Judge Margo K. Brodie, he argued that the Eastern District lacks jurisdiction to charge his client because the banker was working for the foreign subsidiary Goldman Sachs Malaysia, meaning he should not be considered an employee of the United States-based Goldman Sachs.
Agnifilo did not respond to a request to comment by press time. Weinstein finds that to be a solid point, calling the case “emblematic of U.S. overreach.”
“At the core of the Foreign Corrupt Practices Act was trying to prevent bribery of government officials in foreign countries from interfering with the business of American corporations,” Weinstein, of the Miami-based firm Jones Walker, told Courthouse News.
Since it was enacted in 1977, the statute has morphed into the United States policing the world, Weinstein said, “investigating and interloping” into activities that take place solely outside the country.
“The outcome of this case is going to continue to stamp and create an impression of how the FCPA is used,” Weinstein predicted, “particularly in the more recent standards that have been put out by the Department of Justice.”
As an assistant professor at Brooklyn Law School, Andrew Jennings teaches just down the road from the federal courthouse where Ng will be tried. He agreed that the government has been more aggressive pursuing foreign corruption charges in recent years, but said there’s nothing out of the ordinary in the way the law is being applied to Ng — apart from the colossal amounts of money involved.
“FCPA was the first national statute that prohibited foreign bribery, and for many years it was little enforced,” Jennings said. Starting with a push around the early 2000s, Jennings said, that has changed.
An analogue to this case can be found perhaps in the 2017 prosecutions of FIFA executives in Brooklyn federal court, taking on corruption in the Swiss-based organization, and illustrating how broad foreign corruption cases can reach. “The U.S. certainly has soccer fans — but it isn’t considered to be one of the big soccer countries,” Jennings pointed out, “yet it was the U.S. that was bringing this case.”
Goldman Sachs did not comment on the upcoming trial. Following its settlement, a statement from Chairman and CEO David M. Solomon pointed to individuals working for the company, calling it “abundantly clear that certain former employees broke the law, lied to our colleagues and circumvented firm controls.”
Solomon said the bank had established an “Insider Threat Program that leverages enhanced surveillance analytics to prevent and detect potentially harmful action by employees.”
“We must always remain open to improvement, learn from our mistakes and accept the consequences when we fail,” the statement reads.
Ng’s trial is expected to last five to six weeks.