PHOTO: ASIC's new chair, James Shipton
(Supplied: Harvard University)
While Goldman Sachs is in talks with the US government to settle 1MDB scandal for about $2 billion, ASIC Chairman James Shipton maintains his silence despite being identified by this writer and others as a person likely to have been involved in that scandal(see stories below). He has also maintained his silence with regards any investigation into ANZ's part in the 1MDB matter.
Instead he has declared that he will pursue Australian companies to ensure that they properly manage and disclose "climate change" risks.
It is hard to see how Shipton and ASIC might comprehend something as complex as climate change and the risks that flow from it, given his seeming incomprehension of the relatively simple 1MDB paper trail.
Australia’s top corporate regulator worked at bank when it handled bond deals that raised $6.5bn for Malaysian fund
Australia’s top corporate regulator is facing questions in parliament about his role at the investment bank Goldman Sachs when it became embroiled in the world’s biggest financial scandal – the disappearance of billions of dollars from Malaysia’s sovereign wealth fund 1MDB.
James Shipton, the head of the Australian Securities and Investments Commission, was Goldman Sachs’ head of regulation in south-east Asia when the bank handled a series of bond offerings to raise $6.5bn for 1MDB.
But much of the money disappeared and the 1MDB fund went bust, triggering money laundering investigations in at least five other countries and finally bringing down the Malaysian government.
1MDB: The inside story of the world’s biggest financial scandal
The US department of justice has alleged that more than $4.5bn was stolen from 1MDB by top officials of the fund and their associates between 2009 and 2014, with many of the ill-gotten gains spent in the US on property, works of art and even the making of the Leonardo diCaprio film The Wolf of Wall Street.
Malaysia is suing Goldman Sachs for $7.5bn for its role in allegedly helping the misappropriation of the money, $681m of which ended up in a bank account of the now-deposed Malaysian prime minister Najib Razak. The former Goldman Sachs partner who was in charge of the bond deals, Tim Leissner, has admitted defrauding the Malaysian people.
Although based in Hong Kong, Shipton was the investment bank’s head of government and regulatory affairs in Asia Pacific between 2009 and 2013.
His senior position at Goldman at the time has been thrown into sharp relief by the fallout from the royal commission into Australia’s financial services industry. As the head of Asic he has been tasked with ensuring that Australia’s banks abide by the laws governing financial services and that there is no return to the rampant misconduct that led to the Hayne inquiry.
When contacted by the Guardian, Asic’s senior executive leader for corporate affairs, Matthew Abbott, said Shipton had nothing to do with the 1MDB transactions. His role at Goldman Sachs was about “regulatory policy, that is, dealing with international, regional and domestic policy that affected the bank. In this role he was not involved in transactions, nor was he responsible for the firm’s regulatory compliance,” Abbott said.
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But the Greens senator Peter Whish-Wilson will question the Asic boss over what he knew about the mammoth bond dealings that netted Goldman nearly $600m in fees when Shipton appears at Senate estimates on Wednesday evening.
“Rightly or wrongly, this issue may come to reflect on Mr Shipton who now has the mammoth task of restoring trust in our corporate regulator, so it’s important to get this out in the open,” Whish-Wilson said.
“Mr Shipton should take the chance at estimates today to address any potential involvement in 1MDB, get this on public record, and answer questions about any potential reflections on or implications for his position.
“Following the revelations of the royal commission, Mr Shipton has a very big task ahead of him. I hope he takes the chance to clear up any concerns.”
A leading American banking analyst said Goldman Sachs’ compliance system had failed and that the bank had not explained why its internal processes had gone so badly wrong.
Dick Bove, of New York-based Odeon Capital, said the matter went to the “highest level” of Goldman’s executive structure.
“Goldman Sachs says it was lied to by the people putting the deal together. But the problem is that [the compliance team] weren’t doing their job properly and people lost all this money. If one deal went through, fine. But a second and then a third … that is the problem. Why weren’t they asking what happened to the money from the first deal? What was the return? Who was involved?
“Therefore due diligence is deeply flawed. If I was on the federal investigating team – and I’ve been told they’ve been in Goldman Sachs for two years – I would be asking: ‘Why did you not know what was going on and what happened to the money?’”
Whish-Wilson was also expected to raise questions about another Australian connection to the 1MDB scandal. Malaysian investigators have unearthed new details about irregularities with a bond sale carried out in 2009 for a precursor of 1MDB by a Malaysian bank called Am Bank, which is 24% owned by the Australian bank ANZ.
According to a recent report by Bloomberg, the 2009 bond sale arranged for TIA involved bonds being sold at a large discount to insiders which were then quickly resold – some of them on the same day – at a large profit.
Low Taek Jho, the fugitive Malaysian financier believed to be behind the 1MDB scam, was also allegedly the mastermind of the TIA scheme and reportedly profited from it to the tune of $126m.
Sarawak Report, the campaigning group that first exposed the 1MDB scandal, says Am Bank was involved in the bond sale “every bit of the way” and therefore ANZ has a case to answer about why the alleged corrupt dealing went ahead.
Clare Rewcastle Brown, of the Sarawak Report, said: “It makes [ANZ’s] position every bit as awkward as that of Goldman Sachs, which performed a similar role during the later bond issues by 1MDB leading to investigations by the FBI leading to criminal charges from Malaysia as well.”
It renewed calls for an investigaton by Asic into Am Bank’s involvement.
ANZ declined to comment.
Malaysia has filed criminal charges against Leissner and another former Goldman employee, Roger Ng Chong Hwa, will be extradited to the US to face charges of helping misappropriate $2.7bn, bribing officials and giving false statements when helping to issue bonds.
They are being charged alongside the former 1MDB employee Jasmine Loo Ai Swan and Low – also known as Jho Low – who is believed to be in hiding in China.