Goldman Sachs Executive Banned From Banking Over 1MDB Scandal

(Bloomberg) -- The Federal Reserve permanently banned former Goldman Sachs Group Inc. banker Andrea Vella from the industry over his alleged involvement in the 1MDB scandal as the fallout reaches higher into the firm’s ranks.

The Fed’s order announced Tuesday said Vella, a former co-head of investment banking in Asia, failed to inform Goldman that a businessman who’s allegedly the fraud’s mastermind was involved in 1MDB bond offerings that the bank handled in 2012 and 2013. The U.S. Justice Department has criminally charged other former Goldman employees, including Tim Leissner, who pleaded guilty.

Vella agreed to the Fed’s order without admitting or denying wrongdoing, and he’s slated to leave Goldman, according to a person briefed on the matter. The 1MDB conspiracy, in which a global cast of characters is accused of looting billions of dollars from the Malaysian government, has been the biggest scandal in almost a decade for Goldman Sachs, which is still in talks to settle regulatory and Justice Department probes.

“The settlement speaks for itself,” said a spokesman for Goldman, which put Vella on leave in 2018.

Vella’s Conduct

The Justice Department and other U.S. agencies have been negotiating a settlement with Goldman that could lead to the bank paying penalties between $1.5 billion and $2 billion, people familiar with the matter said in December. A Goldman unit in Asia might also be forced to plead guilty as part of the accord.

The Fed said Vella “engaged in unsafe and unsound practices” by failing to ensure that all of Goldman’s internal committees were aware that the 1MDB deal involved Jho Low, a Malaysian financier who allegedly used stolen funds to bankroll a Hollywood movie, buy real estate and support his lavish lifestyle. Goldman knew Low was a “person of concern” and his involvement “heightened potential underwriting risks,” the Fed said in its order dated Jan. 31.

“After years of exhaustive investigation, the Federal Reserve neither alleges that Mr. Vella knew anything about the bribes and kickbacks that have been alleged about others nor seeks to impose a fine -- precisely because Mr. Vella in fact did not know about such conduct,” said Andrew Levander, Vella’s lawyer at Dechert LLP in New York, in a statement. His client agreed to the ban “in order to move on to the next stage of his career” and avoid years of U.S. litigation.

Before Vella’s downfall, he had been Goldman’s top dealmaker in Hong Kong, helping structure 1MDB’s fundraising and then playing a key role in the firm’s initial review of what went wrong. He had been one of two executives overseeing investment banking for all of Asia except Japan.

Full Cooperation

Goldman has previously blamed Leissner for concealing his wrongdoing from the firm’s compliance efforts, while he countered that the bank’s culture of secrecy led him to bypass compliance.

The Fed has been investigating Goldman Sachs’ wider role in the scandal, and Vella has agreed to “fully cooperate with and provide substantial assistance” on the central bank’s probe.

The agency had already moved to ban Leissner and another former Goldman employee, Roger Ng, and fined Leissner $1.42 million. Like Leissner, Ng had also been criminally charged in the scheme to divert cash from the bond offerings into their own pockets and to bribe government officials in Malaysia and Abu Dhabi.

An Italian, Vella graduated from the Sapienza in Rome with a master’s in aeronautical engineering. On Wall Street, he won a reputation for being splashy, macho and charming, and was drawn to deals that could be lucrative but controversial. Before he joined Goldman as a partner, Vella’s team at JPMorgan Chase & Co. arranged a Greek bond deal in 2007 that left the country’s pension funds feeling cheated, and triggered the ouster of its labor secretary.

©2020 Bloomberg L.P.

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