Goldman Executive Who Helped Court 1MBD Leaves Firm
February 24 2017 - 10:49AM
Dow Jones News
By Liz Hoffman and Tom Wright
A senior Goldman Sachs Group Inc. official who was involved in
the bank's dealings with a Malaysian state investment fund that is
the subject of a sprawling global corruption probe has left the
firm.
Toby Watson, a partner who was among those who solicited
business from 1Malaysia Development Bhd., known as 1MDB, departed
last month, according to people familiar with the matter. He
becomes the latest executive who worked with 1MDB to leave the
firm, although it isn't clear if his departure was connected in any
way to that matter or investigations into it.
Mr. Watson couldn't be reached for comment.
Mr. Watson ran the Hong Kong branch of a trading desk within
Goldman called Principal Funding and Investing, which engages in
complex fundraisings.
The division has been behind some of Goldman's most profitable
deals, including the insurance swaps with American International
Group Inc. that paid off handsomely during the credit crisis. More
recently, it helped mobile-phone company Sprint Corp. raise
billions of dollars of new debt secured by its airwaves, an unusual
and complicated arrangement.
And it was involved in Goldman's dealings with 1MDB, which have
pulled the bank into a global corruption probe. Goldman raised $6.5
billion for 1MDB, much of which prosecutors now allege was siphoned
into personal accounts of government officials and their
acquaintances.
Investigators are trying to determine whether Goldman had reason
to suspect that money it helped 1MDB raise was misused and, if so,
whether the bank was obligated to report those concerns to
authorities. Goldman has said it had no reason to believe the money
was being used inappropriately.
Goldman earned nearly $600 million from buying the fund's bonds
and selling them on later to other investors, a trade done out of
PFI, according to people familiar with the matter.
Around the time 1MDB was founded in mid-2009, Goldman employees
including Mr. Watson traveled to Kuala Lumpur to meet fund
executives, according to people familiar with the matter. Some came
away with questions about 1MDB, including why it wanted to raise so
much money and the lack of investment experience of its employees,
the people said.
In 2012, Mr. Watson's desk bought $3.5 billion in two bond
issuances by 1MDB, later selling them to external investors at a
profit, according to people familiar with the matter.
Late that year, Mr. Watson was named a partner at Goldman, an
elite title that confers wealth and influence inside the firm.
A British citizen, he began his career at Goldman in London,
where he held various roles in credit-trading. He moved in 2009 to
Hong Kong, and later returned to the U.K.
Write to Liz Hoffman at liz.hoffman@wsj.com and Tom Wright at
tom.wright@wsj.com
(END) Dow Jones Newswires
February 24, 2017 10:34 ET (15:34 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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