Now anytime someone says “Goldman Sachs,”
you know something bad happened.
What may be the biggest financial scam
Two former Goldman Sachs bankers
and a fugitive Malaysian financier
have been charged over
the alleged plunder of billions of dollars
from Malaysia’s State Development Fund.
filed criminal charges
against the bank and two former employees,
saying they committed, “Gross violations
of the country’s securities laws.”
The Malaysian government
has accused Goldman Sachs
of helping a fund steal billions
of dollars from the country.
Now, Goldman has denied any wrongdoing,
but in the U.S., the bank is under
criminal investigation as we speak,
and the Justice Department
reportedly wants any settlement
to include a guilty plea.
That would be unprecedented.
Just so you know, Goldman Sachs
has never once plead guilty
in 150 years.
Which is shocking
when you look at all the shady shit
they’ve been accused of.
Price manipulation, insider trading,
gender discrimination, securities fraud,
and those are just the names
of their conference rooms.
Goldman Sachs –
they didn’t even face charges in ’08.
Wall Street powerhouse,
Goldman Sachs accused of fraud.
Knowingly and willfully cheating clients.
Top executives boasting about
the profits they made
during the housing crisis.
Goldman Executives held their ground.
Regret to me means something that
you feel like you did wrong.
And I don’t have that.
American Psycho with an overbite
is talking about regret
like it’s something they sell at Barney’s.
He’s just like,
“Regret. I don’t have that.
Where do I buy it?”
This scandal in Malaysia is way bigger
than Goldman Sachs.
It spanned four continents,
involved billions of dollars,
14 tiaras, Marlon Brando’s Oscar,
a $27 million diamond necklace,
a grand piano for Miranda Kerr,
“Gangnam Style” dude just comes up a lot
in this story, it’s very weird, okay?
At the center
of the entire Malaysian scandal
was something called
a sovereign wealth fund.
That’s what I want to talk about tonight.
Sovereign wealth funds are giant pools
owned and managed by a country or state.
Now, you tend to find them in countries
that depend on a single resource like oil.
Okay, so if oil crashes, you don’t want
your economy to crash with it.
So you take your oil money
and you put it in a sovereign wealth fund
and invest it in things that aren’t oil.
Basically, countries that start
sovereign wealth funds
for the same reason that Diddy
and Mario Lopez started tequila companies.
You don’t know how long
the hits are going to last,
so you got to diversify.
But the reason we need to talk about
sovereign wealth funds
is because they have tons of cash,
are basically unregulated,
and can be used to rob an entire country.
The first time a lot of people
heard about sovereign wealth funds
is when they were actually helping
the U.S. economy.
As Wall Street was losing tens of billions
of dollars due
to the mortgage and credit crises,
it wasn’t the Fed or Congress
that came to the rescue.
It was something called
“sovereign wealth funds.”
Sovereign wealth funds bailed out
Abu Dhabi’s fund became
the biggest stakeholder in Citi.
China bought 10% of Morgan Stanley
and 10% of the Blackstone Group.
And all that foreign money
made people worry.
How much do you have to invest?
About $200 billion.
This is the fund’s president– Gao Xiqing.
Yes, it rhymes with cha-ching.
You know what’s crazy?
She did that in voiceover.
Think about it, like, she went into a booth.
It was written down.
She read from a script. “Gao Xiqing
rhymes with cha-ching.
I’m Leslie Stahl, those ethnic puns
and more tonight on 60 Minutes.”
And then she just banged a gong.
Now, since 2008, sovereign wealth funds
have exploded with cash.
There are 78 sovereign wealth funds
in the world.
Almost a third of them were created
in the last decade.
they controlled around $3 trillion.
Now, it’s about $8 trillion.
Now, I know that number seems meaningless.
You know, it’s like when you’re a
little kid and you’re like,
“I’ll bet you nine gajillion dollars.”
And you’re like, “All right.”
So just for context.
$8 trillion is about 50%
of Gaddafi’s Ray-Bans budget.
it’s equivalent to 10% of the global GDP,
and that money is everywhere.
Silicon Valley has taken a shitload
of money from sovereign wealth funds
and only half of it went to scooters.
But Uber, Tesla, Lyft, WeWork, Wag, Slack,
Magic Leap, DoorDash, and Fanatics
have all taken money. Fanatics, you guys.
Look, the next time you get
a Draymond Green bobblehead,
just know you made
the King of Bahrain $28.
It gets even more random.
Abu Dhabi’s sovereign wealth fund
has a 75-year lease
on Chicago’s parking meters.
Yeah. That’s right, Chicago.
Your parking meters are Muslim.
Think about it.
A lot of them face east,
they have arranged marriages,
and they don’t eat pork. They’re Muslim.
The biggest and best run
sovereign wealth fund is in Norway, okay?
It’s worth $1 trillion,
which is huge.
Especially for a country that tiny.
Norwegians own shares in more than
8,000 companies worldwide,
including over 200 in Canada.
The Pension Fund, as it’s now called,
makes every Norwegian a millionaire
Norway used to have
Who Wants To Be A Millionaire,
and it got canceled because everybody won.
The good news is
Norway’s fund is highly transparent.
The problem is many sovereign wealth funds
aren’t in democracies.
A lot of them are in petrostates:
Russia, Saudi Arabia, UAE, Qatar,
Libya, Oman, Kuwait, Algeria, Angola.
These countries have
an average democracy index score
of three out of ten, which ranks them
somewhere between dictatorship
and Indian household.
In 2018, the son of Angola’s dictator
was accused of funneling $500 million
from the fund into a foreign bank account.
Many of these sovereign wealth funds
are controlled by autocrats–
MBS, Erdoğan, Putin.
Do you trust these guys?
‘Cause they’re nothing like Norway.
Norway’s like a boyfriend
who doesn’t have a passcode on his phone.
He’s just like, “Swipe up.”
These guys are like a boyfriend
who has a second phone.
You’re like, “Vlad,
why do you have a Motorola RAZR?”
And he’s like, “It’s for work.”
No transparency, little oversight,
lack of democratic institutions.
All of this makes sovereign wealth funds
ripe for abuse.
No matter who’s running them, they want
to make their pools of money bigger,
and that’s why they need investment banks
like Goldman Sachs.
But banks like Goldman can take advantage
of sovereign wealth funds,
and they do it in two key ways.
The first thing they do
is they leverage their expertise.
Take Libya, okay?
In 2006, Libya set up a $60 billion
sovereign wealth fund
that was looking to grow,
and then Goldman showed up.
Libya’s sovereign wealth fund lost almost
$1.3 billion in trades with Goldman.
When they realized
they had lost all that money,
they went to Goldman and were furious.
Furious is the word.
I mean, look at the way Gaddafi treats
his own people.
I can’t imagine he reacted particularly
well to losing 98% of his investment.
No, I’ve been told you really can’t lose
money in Libya or Gaddafi’s money
or you get in a lot of trouble.
A lot of trouble?
This is a guy
who blew up a commercial airliner.
A lot of trouble is an understatement.
Gaddafi’s family friend who ran the fund
went up to a Goldman rep and yelled,
“Fuck your mother.
Fuck you and get out of my country.”
Which is also how
Gaddafi signed his emails.
Now, get this.
Goldman took home $200 million in fees,
and Libya says it lost $1.2 billion.
Libya was looking
for boring, safe Investments,
but Goldman took their money
and made a complex, risky trade.
In court, Libyan officials claimed that
they had no idea what was going on.
Goldman won the suit,
but there is no question their expertise
helped them profit from Libya’s ignorance.
And those tactics seem to be part
of Goldman’s overall culture and strategy.
Just listen to this former Goldman VP.
Getting an unsophisticated client,
it was the golden prize.
The quickest way
to make money on Wall Street
is to take the most sophisticated product
and try to sell it
to the least sophisticated client.
That’s the same way they sell credit cards
on college campuses.
They’re like, “Hey, dude, you want
a tank top that says MasterCard on it?”
And you’re like, “Sure,
here’s all my information.
Thanks for the triple XL tank top.”
In order to really understand…
how much damage Goldman
and sovereign wealth funds can do,
we have to get back to Malaysia.
The case that could send
Goldman Sachs bankers to jail.
Just like in Libya,
Goldman Sachs was brought in
to help Malaysia grow
its sovereign wealth fund,
1Malaysia Development Berhad
Not IMDB, 1MDB.
But 1MDB didn’t even exist
until this guy came into the picture.
Jho Low. He was this 27-year-old
This gulab jamun with glasses…
got connected with
Malaysia’s Prime Minister Najib Razak.
Look at this.
He somehow convinced the prime minister
of a country
to set up a sovereign wealth fund.
Now, Najib is theoretically
a democratic leader,
but he is tight with a lot of autocrats,
like Rodrigo Duterte,
the President of the Philippines.
You guys remember Duterte.
In fact, Prime Minister Najib
and President Duterte are so tight
that during a 2016 state dinner,
they started catching feelings.
Thank you very much, Mr. President.
They should totally fuck.
But then Najib would have to
imprison Duterte for sodomy.
He’d be like, “That was great,
you’re under arrest.”
Jho Low claimed 1MDB was supposed
to help Malaysia build infrastructure
and increase development,
and investors bought his sales pitch.
Let’s all think big. Let’s all be bold.
And let’s really think about our place
in this world
and work together to create the world
we truly want to live in.
Wow, that’s so beautiful and selfless.
So what world
did he truly want to live in?
Yes, that’s Punjabi MC.
Yes, that’s Paris Hilton.
And yes, he’s wearing a fedora
that was probably paid for
by the people of Malaysia.
More than $4.5 billion were stolen
between 2009 and 2014.
A number of corrupt 1MDB officials
treated this public trust
as a personal bank account.
Najib and Jho Low are accused of stealing
at least $4.5 billion,
and they blew it on insane shit.
For Jho Low’s 31st birthday,
he got Psy, Pharrell, Jamie Foxx, Redfoo,
Busta Rhymes, Q-Tip, Swizz Beatz, Ludacris,
and Chris Brown to perform.
He got Britney Spears
to jump out of a cake
and 20 little people to walk around
dressed as Oompa Loompas.
Now it says a lot when Chris Brown isn’t
the most offensive thing at your party.
Jho Low also spent millions
on real estate,
a private jet, a mega-yacht,
a clear piano for Miranda Kerr,
a Picasso, a Monet,
and a Leonardo DiCaprio.
-I’m serious. I’m dead serious.
Even though 1MDB denies it,
Jho Low helped set up
a production company
that financed The Wolf of Wall Street.
Leo even gave them a shout-out
at the Golden Globes.
Joey, Riz and Jho, thank you
for being not only collaborators,
but taking a risk on on this movie.
A movie about a hard partying financier
who stole millions of dollars
was made by a hard partying financier
who stole millions of dollars.
That would be like
if Predator was directed by Bryan Singer.
By the way, Jho Low didn’t stop
with Wolf of Wall Street.
The movies Dumb and Dumber To
and Daddy’s Home
were also financed illegally.
The production company denies wrongdoing
There was definitely wrongdoing.
Now, you’re probably wondering
how on earth
did the prime minister of Malaysia
and the kid from Up pull this off?
Well, they hired Goldman Sachs,
which gets us to Goldman’s second tactic
for exploiting sovereign wealth funds.
Reputation. Whether you like them or not,
Goldman Sachs is synonymous with money,
success, and money again.
Goldman helped 1MDB appear more legit
than they actually were.
It’s like awards on movie posters.
Like, you don’t ever read
that leafy circle.
You just trust it once you see it.
It could say anything in there,
and in this case,
that leafy circle was Goldman Sachs.
Now, here’s how it went down.
Jho Low and Najib started
the sovereign wealth fund, 1MDB.
They worked primarily
with two Goldman bankers,
Roger Ng and Tim Leissner,
who helped take 1MDB to the next level.
How much of Jho Low’s scheme
do you think was actually,
would have been possible
without the help of bankers
like those from Goldman Sachs?
No, that’s totally right.
It would have been impossible
without the help of the enablers
in the global financial system.
I mean, the money was raised
by Goldman Sachs.
It’s true. In 2012, Ng and Leissner
started helping 1MDB raise money
from investors who were told
that their money
would help pay for power plants.
The only problem was 1MDB
had no credit rating,
which made it harder
to convince people to invest.
So to make the power plant deals
Goldman Sachs used their credibility
and paired 1MDB up
with Abu Dhabi’s sovereign wealth fund,
IPIC, which had $70 billion
in assets and solid credit.
All of this
was their verified blue check mark
and investors saw that package,
Goldman, IPIC, and 1MDB and they bought in.
Over the next year,
Goldman raised $6.5 billion for 1MDB,
but instead of all of it going
into power plants,
Jho Low allegedly siphoned off
$1.4 billion into a shell company.
From there, the money allegedly went
to pay off everyone who helped.
It also paid for Daddy’s Home,
Oompa Loompas, and Miranda Kerr’s piano,
and Goldman walked away with $600 million
in fees and revenue.
Now, we reached out to Goldman Sachs
to ask them about these fees,
and they said the fees and revenue
were fair given the risk assumed.
But reporters say that $600 million
is 200 times what they would normally make
on a deal that size.
Clearly, something shady is going on here.
Goldman used their expertise
to raise the money for 1MDB
and used their reputation
to make this scheme look legit.
Prime Minister Najib did everything
he could to cover this up.
He cracked down on reporters.
He fired officials investigating him.
He even threw a concert with Psy
to rally support
for his political party BN.
How is Psy always at the scene
of the crime?
He’s the Forrest Gump
of shady Asian business deals.
In the end, the scandal
brought down Najib’s entire government,
and he was arrested.
He insists he’s being framed.
So he did what every wrongly accused man
does to clear his name.
He makes his own version
of “We Are the World.”
This is the saddest day of my life.
Hopes as high as a mountain,
can be crumbled into dust.
Why did such a tragic event ever happen
in my life?
That song is so bad
it created more world hunger.
Najib is on trial in Malaysia as we speak,
and Jho Low is still on the run.
What they did with Goldman
caused real pain.
Thanks to two guys,
ordinary Malaysians are stuck
with $13 billion of debt.
They have not only stolen the money
but they have helped
to destroy the economy
and the confidence in the system.
Apology is not enough.
Apology with $7.5 billion,
that is what matters.
Goldman Sachs should understand
the agony and the trauma suffered
by the Malaysian people.
Roger Ng, one of the Goldman bankers,
has plead not guilty,
but U.S. prosecutors are pushing
for a plea deal.
Tim Leissner has already plead guilty
to conspiracy to commit bribery
and money laundering. Goldman Sachs says
they were unaware of their activity
and is trying to make it seem like
1MDB was the fault of rogue employees.
But in his guilty plea,
Leissner said, “Avoiding compliance
was part of Goldman culture.”
And experts agree.
Now, it’s significant that the bank itself
has been targeted
rather than just its employees.
Because this indicates that
the Malaysian authorities believe
that Goldman knew that
money was being misappropriated.
This was not rogue traders.
These are very senior people.
And it went all the way up the food chain
at the firm,
and they should have known.
Goldman Sachs has actually been
doubling down on sovereign wealth funds.
Just last year,
they worked with Saudi Arabia.
Now, they’re working with China.
These deals are gonna keep happening.
They’re not going away.
And that’s okay,
because sovereign wealth funds
aren’t inherently bad.
But in the wrong hands,
they can do massive damage to countries.
That’s why a criminal case against
Goldman Sachs could be so important.
It could help set a precedent
about how much we scrutinize
these vast pools of money
with little to no regulation.
Until that changes,
there are going to be more 1MDBs
and even more Jho Lows.
Jho Low, if you’re watching,
wherever you are,
I can’t get you another $4.5 billion.
I can’t get you acquitted,
but if you turn yourself in,
there’s one thing I can get you.
The biggest, wildest Psy concert
the world has ever seen.
Psy, if you’re watching, wherever you are,
I’m calling in that favor.
Check your RAZR phone.