Categories
Blog

Roger Ng Verdict – Guilty

The Roger Ng Foreign Corrupt Practices Act (FCPA) trial has now concluded its jury phase. Last week the jury came back with a stunning victory for the prosecution with a guilty verdict against defendant Ng. Stewart Bishop, writing in Law360, said the jury deliberated over 16 hours over four days to arrive at the verdict. The trial, which lasted over two months, was one of the most extensive FCPA cases tried in recent memory. Probably the last such big FCPA trial were the two Gun Sting cases where two different sets of defendants were tried in 2011. The jury hung in both cases, the trial judge declared mistrials and the government eventually dismissed all pending charges against the defendants.
In the Ng case there were three clear issues the jury had to wade through to get to its verdict. The first was the veracity or lack thereof of key prosecution witness Timothy Leissner, a serial liar who was the backbone of the government’s trial testimony against Ng. As Bishop noted, “Leissner was pilloried on cross-examination over his admissions to extensive lies for years in both his professional and personal lives. He admitted to being married to two different women at the same time, twice, and lying about it. He also admitted to forging divorce documents and committing immigration fraud, as well as stealing.”
However, Leissner provided crucial testimony against Ng. Bishop noted, “Over the course of 10 days on the witness stand, Leissner said Ng was intimately involved in the scheme and placed him at a key 2012 London meeting with Low, Leissner and others in which Low laid out what government officials — including the former prime minister of Malaysia and an influential sheikh in Abu Dhabi — had to be bribed to ensure the bond deals went through.”
The second issue was the documentary evidence. The reason it was so critical was because it gave the jury evidence to convict Ng but in a way that they did not have to believe or even give any credence to the testimony of Leissner. To present this documentary evidence, the government brought forward FBI agent Eric Van Dorn, a forensic account. As reported by Patricia Hurtado and David Voreacos in Bloomberg, in this phase of the trial and perhaps most “central to the government’s case was an FBI chart showing that Leissner sent $35 million of the booty to a shell company controlled by Ng’s wife, Lim.” It was Van Dorn who explained the chart to the jury.
According to Tarani Palani, writing in The Edge, Van Dorn testified that “on March 14 that transfers of ill-gotten gains were made to entities and accounts under Tan Kim Chin, Ng’s mother-in-law. About US$35.1 million was transferred to the account of Silken Waters Victoria Square, whose beneficiary is Tan. This was effected through four separate transactions over 2012 and 2013 and stemmed from the first and third 1MDB bond deals, codenamed Project Magnolia and Catalyze.” From there, “The money transferred to Silken Waters was then funnelled through various other bank accounts that were either Tan’s bank accounts in UBS and Deutsche Bank or a joint bank account she held with her daughter, Ng’s wife Lim Hwee Bin, in OCBC Singapore and OCBC Malaysia.”
The final issue for the jury was the defense which consisted of Ng’s wife testifying to the source of this $35 million. According to Luc Cohen, writing in Reuters, “Ng’s wife, Hwee Bin Lim, testified on Monday that shortly after Ng began working for Leissner in the mid-2000s, she invested 48 million yuan – about $6 million at the time – at a Chinese company owned by the family of Leissner’s wife, Judy Chan.” It was allegedly this $6 million investment which grew into the $35 million funneled to shell companies controlled by Ng. The first problem for the defense is that Lim was “tied into knots” during her cross, according to one court watcher. But the bigger problem was that Lim, who is a corporate lawyer by professional training, had ZERO documents to back up her claims. She had no agreement with Chan regarding the original investment. She had no annual (or indeed any) statement which would show the status of the investment during the six-seven years the money was invested. Finally, she had no documents when the investment was concluding showing the arrangement was over or even the final payout.
At this point, we do not know who or what the jury believed or who or what the jury did not believe during its deliberations. The jury has not said anything save one comment which was reported by Hurtado as “outside the courtroom a juror who declined to give his name stopped briefly when asked about the outcome. “I have said all I have to say in the courtroom today with my verdict,” he said.” Not very enlightening as to what the jury may or may not have believed.
There will no doubt be an appeal of this verdict. Hurtado reported defense counsel Marc “Agnifilo said, he would challenge the conviction before Brodie, particularly on the charge Ng conspired to violate U.S. anti-bribery laws by circumventing Goldman’s internal accounting controls. During the trial, Agnifilo and prosecutors agreed this was the first time the charge had been considered by a federal jury. “We’ve never been here before — it is all brand new territory,” he said after the verdict.”
What does all this mean for the Department of Justice? First and foremost, it will excise the ghosts of the Gun Sting trial debacles. While this criminal was originally filed several years ago, it could well be a starting point for a reinvigoration of the Yates Memo and the prosecution of individuals in FCPA criminal actions as suggested by Deputy Attorney General Lisa Monaco in her speech before the ABA White Collar Section last October. Procedurally, it demonstrates that even if you have a pathological liar on the witness stand, if you present documentary or other tangible evidence which support their testimony, the jury can believe that the documents or records are not lying. Such documentary evidence can also uphold a verdict on appeal. Finally, if your defense is so implausible as to defy common sense, you had better have something other than a fanciful story and faulty memory to back it up.
But there is still the post-trial motion for significant discovery abuse by the prosecution as well as the legal issues noted above. There is still much to go on down the road.
And Timothy Leissner has yet to be sentenced. His sentencing is set for July 6.

Categories
Blog

Roger Ng Trial Goes to the Jury

The Roger Ng Foreign Corrupt Practices Act (FCPA) trial has now concluded its testimony phase, the parties have closed and the decision on freedom or not for Ng rests with the jury. The closing arguments highlighted the strengths and weaknesses of both parties’ positions in the trial. As reported by Patricia Hurtado, writing in Bloomberg, the prosecution’s closing assailed Ng’s defense based upon the testimony of Ng’s wife, Hwee Bin Lim, who testified that a “$35.1 million infusion of capital into a shell company she controlled was not a kickback for her husband in the 1MDB scheme, but was from an unrelated, legitimate business transaction.” Luc Cohen, writing in Reuters, said that “Ng’s wife, Hwee Bin Lim, later testified for the defense that the business venture was, in fact, legitimate. She said she invested $6 million in the mid-2000s in a Chinese company owned by the family of Leissner’s wife at the time, and the $35 million was her return on that investment.”
The biggest problem for the prosecution was its star witness Timothy Leissner. From his innocuous “lying a lot” admission, the government had to both depend on Leissner’s testimony and distance itself from it, largely at the same time. In the former category, Cohen wrote that “Leissner said the men (he and Ng) agreed to tell banks a “cover story” that the money was from a legitimate business venture between their wives and that Alixandra Smith, a prosecutor, said in her closing argument that other evidence backed up Leissner’s testimony.”
In the latter category, Matthew Goldstein, writing in the New York Times, said “A federal prosecutor told jurors on Monday that they had received enough evidence to convict a former Goldman Sachs banker for his role in one of the biggest international money laundering and bribery schemes even without the testimony of the government’s star witness.” He went on to note that the prosecutor claimed Leissner had selected moments of truthful testimony, writing “Mr. Leissner did not lie when he testified in federal court in Brooklyn to the key facts of the scheme, which was funded by a series of bond offerings that Goldman arranged for the 1MDB fund.”
The defense assailed Leissner and his testimony in their grueling 6-day cross examination, where Leissner “admitted to lying a lot in life. He was forced to admit to initially lying to federal agents, to his fellow partners at Goldman and to his wives and girlfriends.” At closing, Ng’s attorney “said Mr. Leissner was a man who “will lie if it suits his interest.” He said that, despite what the prosecution had said, without Mr. Leissner’s testimony the government could not connect Mr. Ng to the conspiracy to steal billions from the 1MDB fund. There is no evidence that connects Roger. There is not a dirty email. Not a bad text message.”
Interestingly, in the prosecution’s rebuttal, another prosecutor, Drew Rolle appeared to change tactics to defend and rehabilitate Leissner. Stewart Bishop, writing in Law360 said “Rolle also mounted a last-ditch defense of Leissner. Tim Leissner came in here, took the stand and told you the unvarnished truth,” Rolle said. “It was painful, but that’s what has to happen, because it’s the truth.” When you must try and rehabilitate your story witness on rebuttal, it is never a good sign.
Finally in an interesting twist, Hurtado reported that “The jury in the 1MDB conspiracy case against former Goldman Sachs banker Roger Ng has asked to review testimony from his wife that the defense says is key to its case. After seven weeks of testimony in federal court in Brooklyn, New York, the jurors deciding the fate of Goldman Sachs Group Inc.’s former head of investment banking in Malaysia made the request soon after they began their deliberations on Tuesday afternoon.” Trial lawyers and trial watchers are continually trying to read signs from the jury. It seems to me that this request means that the jury took Ng’s defense to heart through the testimony of his wife about the source of the family’s funds.
We all now have to sit back and wait for the jury to return with its verdict. If the jury comes back with a guilty verdict, it will bolster the Department of Justice’s (DOJ) attempts to hold individual actors culpable for their actions in engaging in FCPA violations and other white collar crime involving corporations. If the jury comes back with a not guilty verdict in the wake of the largest corporate FCPA fine and penalty, against Ng’s former employer Goldman Sachs, it could bode poorly for DOJ attempts to hold individuals accountable in similar cases or even other cases of fraud cases going forward. If there is a not guilty verdict in the Ng and you couple it with the recent not guilty verdict in the prosecution of Mark Forkner, the former chief technical pilot at Boeing responsible for the 737 Max, it may well point to the difficulties of trying to hold employees at large corporations responsible.
Mike Volkov said of the Forkner verdict, “Juries often bring justice to deliberations and verdicts.  In the Boeing case, the jurors saw through the government’s lack of fairness – Boeing officials were not charged – only a chief technical pilot was held accountable.  The fundamental flaw in this approach is that even assuming that Forkner engaged in misconduct, his actions or failures to act occurred in the context of an organization with colleagues, supervisors and other senior officials ultimately responsible for Boeing’s actions.” He concluded “Forkner’s defense attorney argued to the jury, “This was a massive corporate failure, and Boeing simply needed  someone to pin it on.” The jury agreed.”

Categories
Daily Compliance News

April 6, 2022 the Will He Reinstate Trump Edition


In today’s edition of Daily Compliance News:
·      Elon Musk joins Twitter BOD. (WSJ)
·      PCAOB fines former KPMG audit head. (WSJ)
·      EU funding to Hungary at risk due to corruption.  (FT)
·      Closing arguments in Roger Ng trial.  (Law360)

Categories
Daily Compliance News

April 2, 2022 the Truth Shall Set You Free Edition


In today’s edition of Daily Compliance News:

  • Rethinking using IP address to enforce sanctions. (WSJ)
  • The truth will set you free. (Bloomberg)
  • The most common types of corruption in South Africa. (Business Tech)
  • House to look into Amazon safety practices. (NYT)
Categories
Blog

Will Roger Ng Walk?

One of the most interesting Foreign Corrupt Practices Act (FCPA) criminal trials in sometime is ongoing in New York, that of Roger Ng. The lead up to the trial and in trial reporting efforts have been led by Law360and its lead reporter Stewart Bishop and most of information in this post comes from that site. Unfortunately, it is behind a paywall so if you want to follow it going forward you will have to subscribe. According to Bishop, Ng was charged with conspiring to violate the FCPA and money laundering conspiracy along with his employer Goldman Sachs Group, Inc., its former Southeast Asia chairman Tim Leissner and financier Jho Low. The charges were bribery of “Malaysian and Emirati officials and to circumvent the internal accounting controls of Goldman, which underwrote more than $6 billion in bonds issued by 1MDB in three offerings in 2012 and 2013. Leissner pled guilty over his role in the alleged scheme, while Low has remained abroad, out of reach of U.S. authorities for now.”
The prosecution’s case turns almost exclusively on the testimony of Leissner, one of the most pathological liars ever to grace the witness stand. Indeed, Matthew Goldstein, writing in the New York Times, reported this question by Ng’s defense counsel to Leissner, “Do you think you are good at lying?” Leissner demurred on this question but did admit he had “lied a lot”. Goldstein cited to Rebecca Roiphe, a former prosecutor and a professor at New York Law School who specializes in legal ethics, who related “it could be tricky to rely on such a witness, but “it isn’t a fatal blow.”” She said a prosecutor can argue that a witness is “a horrible person” and “a serial liar” who has had “a come-to-Jesus moment. That can work when you have really bad people who have lied a lot,” she said.””
What do Leissner’s admitted lies consist of? Leissner admitted under cross-examination that he had presented “a bogus divorce decree to his now-estranged wife, the model and fashion designer Kimora Lee Simmons, so that she would marry him eight years ago.” Defense counsel also got Leissner to “recount the many ways he deceived his wives, particularly Ms. Simmons. Mr. Leissner admitted that he had used an email account in the name of his second wife, Judy Chan, to communicate with Ms. Simmons while dating her, and that he was still married to Ms. Chan when he and Ms. Simmons were wed. (Mr. Leissner was also legally married to another woman when he married Ms. Chan.)” Leissner also admitted that some $10MM of his ill-gotten gain from 1MDB was used to “buy a $10 million house for one of his girlfriends (while married) so she would not go to the authorities.”
Of course, Leissner now maintains he is “telling the truth about Mr. Ng, who prosecutors say helped line the pockets of officials in Abu Dhabi and powerful Malaysians close to then Prime Minister Najib Razak.” Leissner testified “Mr. Ng was his primary contact at Goldman, which earned roughly $600 million in fees to arrange the $6.5 billion in bond deals for the fund. “Roger made him one of his clients,” Mr. Leissner said. He testified that Mr. Ng had set up many of the meetings to plan the scheme, including one at Mr. Low’s London apartment during which Mr. Low drew boxes on a piece of paper with the names of all the officials that would get bribes and gifts. For helping arrange the payments, Mr. Leissner said, he raked in more than $80 million. Prosecutors contend that Mr. Ng’s share was $35 million.” Leissner tried to paint Ng as someone very close to Low, even placing Ng “at a star-studded 31st birthday party that Mr. Low arranged for himself in Las Vegas in 2012, although Mr. Ng was not on the guest list.”
But here’s problem No. 1 with this testimony, Ng always worked for and under Leissner during the 1MDB scandal and not the other way round. Leissner admitted under cross that “he — not Mr. Ng — oversaw the payment of most of the bribe money.” As Roiphe later told Goldman, “In a case like this, you hope to avoid a situation where you have a cooperator testifying against someone who is a subordinate.”
Then there is problem No. 2 for the prosecution, which is the government’s claim that Ng received some $35 million in ill-gotten gains from the 1MDB scandal. Ng’s lawyers have responded that any money Ng received, was repayment of a debt one of Leissner’s wives owed Ng’s wife. The prosecution has to show Ng received this money.
As further reported by Bishop, the prosecution concluded its direct case with “An FBI agent on Tuesday outlined how kickbacks allegedly flowed from Malaysian sovereign wealth fund 1MDB to former Goldman Sachs managing director Roger Ng and others.” Bishop wrote the monies allegedly from Chan Leissner’s account, “to another shell company in the name of Ng’s mother-in-law, initially called Silken Waters but later changed to Victoria Square.” Then came another web of shell company transfers into entities controlled by some combination of Ng, his wife, Lim Hwee Bin, and Lim’s mother. Around $300,000 was spent on diamond jewelry, another $20,000 for an hourglass and over $200,000 for the purchase of Bristol Myers Squibb shares, according to the government.” Finally, there was another $3.15 million which went into yet another “account the government couldn’t identify.” Nothing in this adds up to $35 million.
Got all that. Does that money transfer convince you that Ng was the mastermind that Leissner and the government is trying to make him out to be? By putting one of the great liars of all time on the stand as their key witness with only this as the ‘documented’ evidence, the government is risking everything on Leissner’s testimony; that it will be believable and credible and will not taint the government’s case in one juror’s eyes so the government can garner a guilty verdict. Remember, it doesn’t take 12 to acquit, only one.
There is lots of other unbelievable things going on in the Ng trial, but I will save them for another day.

Categories
Daily Compliance News

March 24, 2022 the Corporate and Regulatory Failure Edition


In today’s edition of Daily Compliance News:

  • Ericsson CEO, CFO sued over Iraqi bribery allegations. (Reuters)
  • Boeing head test pilot found not guilty.  (WSJ)
  • Feds claim $35MM In kickbacks to Roger Ng (Law360)
  • FirstEnergy ex-CEO and SVP orchestrated bribery scheme. (Reuters)
Categories
This Week in FCPA

Episode 292 – the Russia Invades edition


As Russia invades Ukraine, Tom and Jay settle in and are back looking at some of the week’s top compliance and ethics stories this week in the Russia Invades edition.
Stories

  1. What Russia invasion could mean for corporate governance. Michael Peregrine in Forbes.com. What do sanctions mean for US companies? Jaclyn Jaeger in Compliance Week (sub req’d)
  2. Why is subculture audits so critical? Vera Cherepanova explains in the FCPA Blog.
  3. KT Corp. settles FCPA enforcement action. Tom (FCPA Compliance and Ethics Blog) and Mike Volkov (Corruption Crime and Compliance) both have 3-part series. Matt Kelly’s take in Radical Compliance. Tom and Matt in Compliance into the Weeds.
  4. National Cryptocurrency Enforcement Team and what it means. Kathleen McDermott and Mark Krotoski in CCI. David Smagalla in WSJ Risk and Compliance Journal.
  5. How Credit Suisse facilitated crime, corruption, and dictators. Jessie Drucker and Ben Hubbard in the New York Times.
  6. Why diversity on investigation teams matters. Karin Portlock and Jabari Julien in Compliance and Enforcement.
  7. Could small-cap directors & officers could face ESG liability. Lawrence Heim in practicalESG.
  8. Global trends in corporate governance for 2022. Richard Fields, Rusty O’Kelley III, and Laura Sanderson, in Harvard Law School Forum on Corporate Governance.  
  9. Roger Ng trial in danger of collapse due to prosecution ‘inexcusable error .’Stewart Bishop in Law360(sub req’d)
  10. Using the FCPA to fight the demand side of bribery. Matthew Stephenson in GAB

Podcasts and More

  1. In February on The Compliance Life, I visited with Ellen Smith, a former Director of Trade Compliance who recently started her consulting firm. In Part 1, she discussed her academic background and early professional career. In Part 2, Ellen discussed her move in-house. In Part 3, Ellen discusses being a part of the Compliance Dream Team at Weatherford. In Part 4, Ellen moves into the world of consulting.
  2. On the FCPA Compliance Report, Tom began a 2-part series with Trade Compliance guru Matt Silverman on possible Russia sanction (Part 1) and the corporate response (Part 2). Part 2 posts Monday, February 28.
  3. CCI releases a new e-book from Mike Volkov, “Compliance Culture Revolution .”Available free from CCI.
  4. Gwen Hassan has a special 2-part pod series on Hidden Traffic with Jeff Bond, from the Global Fund to End Modern Slavery, on the impact of climate change on modern slavery. Part 1 and Part 2.
  5. Are you a Star Wars fan? How about an uber-Geek? You will love the 5-part series on Science of Star Wars in the Greeting and Felicitations podcast series on the Compliance Podcast Network if you are either or both. In this series, Tom visits astrophysicist Dr. Ben Locwin on the following topics: Episode 1-Traveling in Hyperspace, Episode 2-Fighting with a Light Saber, Episode 3-Mechanical Prosthetics, Episode 4-Cyborgs, and Robots and Episode 5- Death Star. It is a ton of fun, and you will love it.

Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.

Categories
Daily Compliance News

February 24, 2022 the Ng Trial Suspended Edition


In today’s edition of Daily Compliance News:

  • Implications of Ukraine for corporate governance. (Forbes)
  • Ng trial put on hold after DOJ fails to turn over documents.  (WSJ)
  • KPMG dumps Phil Mickelson. (Golf Week)
  • New EU due diligence law. (NYT)
Categories
Daily Compliance News

February 17, 2022 the More Trouble for Ericsson Edition


In today’s edition of Daily Compliance News:

  • Leissner takes the stand in Ng trial. (Yahoo!News)
  • Zuma efforts to dismiss corruption changes rejected.  (Al Jazeera)
  • Muddy Waters under DOJ scrutiny. (Reuters)
  • Ericsson finds more post settlement corruption. (WSJ)
Categories
Daily Compliance News

February 14, 2022 the Happy Valentine Edition


In today’s edition of Daily Compliance News:

  • Money Money Money at Credit Suisse. (FT)
  • More trouble for Credit Suisse in US.  (Reuters)
  • Roger Ng trial to begin. (NYT)
  • Corruption not just on the mainland. (Honolulu Civil Beat)