Editorial | SFC must continue to flush out those who try to corrupt market

Hong Kong’s securities watchdog has bared its teeth in many cases of malpractice and should spare no effort to safeguard city’s reputation as a global financial hub

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Hong Kong slapped a record fine of US$350 million on Goldman Sachs’ Asia unit for its role in underwriting 1MDB’s bond sales. Photo: Reuters

Published: 8:01pm, 28 Oct 2020Updated: 10:06pm, 28 Oct 2020

A record fine has been slapped on the Asian unit of a major Wall Street bank by Hong Kong’s regulators for its role in Malaysia’s worst financial scandal in recent memory.

The heavy penalty of US$350 million against Goldman Sachs (Asia) for underwriting 1MDB’s bond sales is meant as a deterrent. The Securities and Futures Commission (SFC) needs to send a strong signal that it is keeping a close eye on financial malpractice to maintain the city’s reputation as an international financial hub with a clean environment for business.

The 1Malaysia Development Berhad was a corrupt state fund whose exposure toppled the previous government of prime minister Najib Razak and spanned multiple jurisdictions. Goldman’s unit in Hong Kong ultimately received almost US$210 million in fees, the largest share out of the American bank’s numerous units tainted by the scandal.

Goldman settled the criminal proceedings with the Malaysian government in August for US$3.9 billion in total. Former Goldman Sachs (Asia) partner Tim Leissner has been banned for life from working as a securities and financial adviser in the city. He pleaded guilty in August 2018 to money laundering and corruption charges brought by the US Department of Justice.

Leissner admitted that he had conspired with Malaysian fugitive financier Low Taek Jho, also known as Jho Low, and others to pay bribes and kickbacks to Malaysian and Abu Dhabi officials, to secure business from 1MDB for Goldman Sachs, including the bond offerings. According to US prosecutors, US$4.5 billion was siphoned from 1MDB between 2009 and 2014.

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.css-1m2rp1p{color:#34b8b5;}Editorial | SFC must continue to flush out those who try to corrupt market

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} Hong Kong’s securities watchdog has bared its teeth in many cases of malpractice and should spare no effort to safeguard city’s reputation as a global financial hub

Editorial | SFC must continue to flush out those who try to corrupt market

Hong Kong’s securities watchdog has bared its teeth in many cases of malpractice and should spare no effort to safeguard city’s reputation as a global financial hub