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Malaysia, 1MDB, and Goldman Sachs | Patriot Act with Hasan Minhaj | Netflix - YouTube
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[1]
Now anytime someone says “Goldman Sachs,”
you know something bad happened.
[6]
What may be the biggest financial scam
in history.
[9]
Two former Goldman Sachs bankers
and a fugitive Malaysian financier
[13]
have been charged over
the alleged plunder of billions of dollars
[17]
from Malaysia's State Development Fund.
[18]
Malaysia prosecutors
filed criminal charges
[21]
against the bank and two former employees,
[23]
saying they committed, “Gross violations
of the country's securities laws.”
[28]
The Malaysian government
has accused Goldman Sachs
[30]
of helping a fund steal billions
of dollars from the country.
[34]
Now, Goldman has denied any wrongdoing,
[36]
but in the U.S., the bank is under
criminal investigation as we speak,
[41]
and the Justice Department
reportedly wants any settlement
[44]
to include a guilty plea.
That would be unprecedented.
[47]
Just so you know, Goldman Sachs
has never once plead guilty
[51]
in 150 years.
[52]
Which is shocking
[54]
when you look at all the shady shit
they've been accused of.
[56]
Price manipulation, insider trading,
[58]
gender discrimination, securities fraud,
[61]
and those are just the names
of their conference rooms.
[63]
Goldman Sachs -
they didn't even face charges in '08.
[68]
Wall Street powerhouse,
Goldman Sachs accused of fraud.
[70]
Knowingly and willfully cheating clients.
[73]
Top executives boasting about
the profits they made
[75]
during the housing crisis.
[77]
Goldman Executives held their ground.
[79]
Regret to me means something that
you feel like you did wrong.
[84]
And I don't have that.
[85]
American Psycho with an overbite
is talking about regret
[89]
like it's something they sell at Barney's.
[90]
He's just like,
“Regret. I don't have that.
[95]
Where do I buy it?”
[99]
This scandal in Malaysia is way bigger
than Goldman Sachs.
[102]
It spanned four continents,
involved billions of dollars,
[105]
14 tiaras, Marlon Brando's Oscar,
a $27 million diamond necklace,
[109]
a grand piano for Miranda Kerr,
and Psy.
[113]
“Gangnam Style” dude just comes up a lot
in this story, it's very weird, okay?
[116]
At the center
of the entire Malaysian scandal
[119]
was something called
a sovereign wealth fund.
[121]
That's what I want to talk about tonight.
[123]
Sovereign wealth funds are giant pools
of money
[126]
owned and managed by a country or state.
[128]
Now, you tend to find them in countries
that depend on a single resource like oil.
[132]
Okay, so if oil crashes, you don't want
your economy to crash with it.
[135]
So you take your oil money
and you put it in a sovereign wealth fund
[138]
and invest it in things that aren't oil.
[140]
Basically, countries that start
sovereign wealth funds
[143]
for the same reason that Diddy
and Mario Lopez started tequila companies.
[147]
You don't know how long
the hits are going to last,
[148]
so you got to diversify.
[150]
But the reason we need to talk about
sovereign wealth funds
[153]
is because they have tons of cash,
are basically unregulated,
[156]
and can be used to rob an entire country.
[159]
The first time a lot of people
heard about sovereign wealth funds
[162]
is when they were actually helping
the U.S. economy.
[165]
As Wall Street was losing tens of billions
of dollars due
[168]
to the mortgage and credit crises,
[170]
it wasn't the Fed or Congress
that came to the rescue.
[174]
It was something called
“sovereign wealth funds.”
[176]
Sovereign wealth funds bailed out
our banks.
[179]
Abu Dhabi's fund became
the biggest stakeholder in Citi.
[182]
China bought 10% of Morgan Stanley
and 10% of the Blackstone Group.
[187]
And all that foreign money
made people worry.
[190]
How much do you have to invest?
[192]
About $200 billion.
[194]
-$200 billion?
-$200 billion.
[196]
This is the fund's president-- Gao Xiqing.
[199]
Yes, it rhymes with cha-ching.
[204]
You know what's crazy?
[206]
She did that in voiceover.
[210]
Think about it, like, she went into a booth.
It was written down.
[213]
She read from a script. “Gao Xiqing
rhymes with cha-ching.
[218]
I'm Leslie Stahl, those ethnic puns
and more tonight on 60 Minutes.”
[223]
And then she just banged a gong.
[226]
Now, since 2008, sovereign wealth funds
have exploded with cash.
[230]
There are 78 sovereign wealth funds
in the world.
[233]
Almost a third of them were created
in the last decade.
[236]
In 2007,
they controlled around $3 trillion.
[240]
Now, it's about $8 trillion.
[243]
Now, I know that number seems meaningless.
[245]
You know, it's like when you're a
little kid and you're like,
[247]
“I'll bet you nine gajillion dollars.”
[248]
And you're like, “All right.”
[249]
So just for context.
[251]
$8 trillion is about 50%
of Gaddafi's Ray-Bans budget.
[256]
But seriously,
[257]
it's equivalent to 10% of the global GDP,
and that money is everywhere.
[261]
Silicon Valley has taken a shitload
of money from sovereign wealth funds
[265]
and only half of it went to scooters.
[267]
But Uber, Tesla, Lyft, WeWork, Wag, Slack,
Magic Leap, DoorDash, and Fanatics
[272]
have all taken money. Fanatics, you guys.
[274]
Look, the next time you get
a Draymond Green bobblehead,
[277]
just know you made
the King of Bahrain $28.
[280]
It gets even more random.
Abu Dhabi's sovereign wealth fund
[283]
has a 75-year lease
on Chicago's parking meters.
[288]
Yeah. That's right, Chicago.
[291]
Your parking meters are Muslim.
Think about it.
[294]
A lot of them face east,
they have arranged marriages,
[298]
and they don't eat pork. They're Muslim.
[301]
The biggest and best run
sovereign wealth fund is in Norway, okay?
[305]
It's worth $1 trillion,
which is huge.
[309]
Especially for a country that tiny.
[311]
Norwegians own shares in more than
8,000 companies worldwide,
[315]
including over 200 in Canada.
[318]
The Pension Fund, as it's now called,
[320]
makes every Norwegian a millionaire
on paper.
[324]
Norway used to have
Who Wants To Be A Millionaire,
[326]
and it got canceled because everybody won.
[330]
The good news is
Norway's fund is highly transparent.
[333]
The problem is many sovereign wealth funds
aren't in democracies.
[337]
A lot of them are in petrostates:
Russia, Saudi Arabia, UAE, Qatar,
[342]
Libya, Oman, Kuwait, Algeria, Angola.
[344]
These countries have
an average democracy index score
[348]
of three out of ten, which ranks them
somewhere between dictatorship
[351]
and Indian household.
[353]
In 2018, the son of Angola's dictator
was accused of funneling $500 million
[357]
from the fund into a foreign bank account.
[359]
Many of these sovereign wealth funds
[361]
are controlled by autocrats--
MBS, Erdoğan, Putin.
[364]
Do you trust these guys?
[366]
'Cause they're nothing like Norway.
[367]
Norway's like a boyfriend
who doesn't have a passcode on his phone.
[369]
He's just like, “Swipe up.”
[370]
These guys are like a boyfriend
who has a second phone.
[374]
You're like, “Vlad,
why do you have a Motorola RAZR?”
[376]
And he's like, “It's for work.”
[377]
No transparency, little oversight,
lack of democratic institutions.
[381]
All of this makes sovereign wealth funds
ripe for abuse.
[385]
No matter who's running them, they want
to make their pools of money bigger,
[389]
and that's why they need investment banks
like Goldman Sachs.
[392]
But banks like Goldman can take advantage
of sovereign wealth funds,
[395]
and they do it in two key ways.
[397]
The first thing they do
is they leverage their expertise.
[400]
Take Libya, okay?
[401]
In 2006, Libya set up a $60 billion
sovereign wealth fund
[405]
that was looking to grow,
and then Goldman showed up.
[407]
Libya's sovereign wealth fund lost almost
$1.3 billion in trades with Goldman.
[411]
When they realized
they had lost all that money,
[413]
they went to Goldman and were furious.
[415]
Furious is the word.
[417]
I mean, look at the way Gaddafi treats
his own people.
[419]
I can't imagine he reacted particularly
well to losing 98% of his investment.
[423]
No, I've been told you really can't lose
money in Libya or Gaddafi's money
[427]
or you get in a lot of trouble.
[428]
A lot of trouble?
[429]
This is a guy
who blew up a commercial airliner.
[432]
A lot of trouble is an understatement.
[434]
Reportedly,
Gaddafi's family friend who ran the fund
[437]
went up to a Goldman rep and yelled,
“Fuck your mother.
[440]
Fuck you and get out of my country.”
[442]
Which is also how
Gaddafi signed his emails.
[445]
Now, get this.
[447]
Goldman took home $200 million in fees,
[452]
and Libya says it lost $1.2 billion.
[456]
Libya was looking
for boring, safe Investments,
[459]
but Goldman took their money
and made a complex, risky trade.
[463]
In court, Libyan officials claimed that
they had no idea what was going on.
[467]
Goldman won the suit,
but there is no question their expertise
[471]
helped them profit from Libya's ignorance.
[473]
And those tactics seem to be part
of Goldman's overall culture and strategy.
[477]
Just listen to this former Goldman VP.
[479]
Getting an unsophisticated client,
it was the golden prize.
[483]
The quickest way
to make money on Wall Street
[486]
is to take the most sophisticated product
[488]
and try to sell it
to the least sophisticated client.
[491]
That's the same way they sell credit cards
on college campuses.
[495]
They're like, “Hey, dude, you want
a tank top that says MasterCard on it?”
[499]
And you're like, “Sure,
here's all my information.
[502]
Thanks for the triple XL tank top.”
[505]
In order to really understand...
[507]
how much damage Goldman
and sovereign wealth funds can do,
[511]
we have to get back to Malaysia.
[513]
The case that could send
Goldman Sachs bankers to jail.
[515]
Just like in Libya,
Goldman Sachs was brought in
[518]
to help Malaysia grow
its sovereign wealth fund,
[520]
1Malaysia Development Berhad
or 1MDB.
[523]
Not IMDB, 1MDB.
[525]
But 1MDB didn't even exist
until this guy came into the picture.
[529]
Jho Low. He was this 27-year-old
Malaysian financier.
[533]
This gulab jamun with glasses...
[536]
got connected with
Malaysia's Prime Minister Najib Razak.
[539]
Look at this.
[541]
He somehow convinced the prime minister
of a country
[545]
to set up a sovereign wealth fund.
[547]
Now, Najib is theoretically
a democratic leader,
[549]
but he is tight with a lot of autocrats,
like Rodrigo Duterte,
[553]
the President of the Philippines.
[555]
You guys remember Duterte.
[561]
In fact, Prime Minister Najib
and President Duterte are so tight
[565]
that during a 2016 state dinner,
they started catching feelings.
[569]
Thank you very much, Mr. President.
[601]
They should totally fuck.
[604]
But then Najib would have to
imprison Duterte for sodomy.
[608]
He'd be like, “That was great,
you're under arrest.”
[611]
Jho Low claimed 1MDB was supposed
to help Malaysia build infrastructure
[616]
and increase development,
and investors bought his sales pitch.
[620]
Let's all think big. Let's all be bold.
[622]
And let's really think about our place
in this world
[625]
and work together to create the world
we truly want to live in.
[629]
Wow, that's so beautiful and selfless.
[633]
So what world
did he truly want to live in?
[651]
Yes, that's Punjabi MC.
Yes, that's Paris Hilton.
[655]
And yes, he's wearing a fedora
[657]
that was probably paid for
by the people of Malaysia.
[660]
More than $4.5 billion were stolen
from 1MDB
[665]
between 2009 and 2014.
[668]
A number of corrupt 1MDB officials
treated this public trust
[673]
as a personal bank account.
[675]
Najib and Jho Low are accused of stealing
at least $4.5 billion,
[680]
and they blew it on insane shit.
For Jho Low's 31st birthday,
[683]
he got Psy, Pharrell, Jamie Foxx, Redfoo,
Busta Rhymes, Q-Tip, Swizz Beatz, Ludacris,
[689]
and Chris Brown to perform.
[690]
He got Britney Spears
to jump out of a cake
[692]
and 20 little people to walk around
dressed as Oompa Loompas.
[696]
Now it says a lot when Chris Brown isn't
the most offensive thing at your party.
[702]
Jho Low also spent millions
on real estate,
[706]
a private jet, a mega-yacht,
a clear piano for Miranda Kerr,
[709]
a Picasso, a Monet,
and a Leonardo DiCaprio.
[712]
-I'm serious. I'm dead serious.
-No way!
[714]
Even though 1MDB denies it,
[717]
Jho Low helped set up
a production company
[719]
that financed The Wolf of Wall Street.
[721]
Leo even gave them a shout-out
at the Golden Globes.
[725]
Joey, Riz and Jho, thank you
for being not only collaborators,
[730]
but taking a risk on on this movie.
[732]
A movie about a hard partying financier
who stole millions of dollars
[737]
was made by a hard partying financier
who stole millions of dollars.
[741]
That would be like
if Predator was directed by Bryan Singer.
[746]
By the way, Jho Low didn't stop
with Wolf of Wall Street.
[751]
The movies Dumb and Dumber To
and Daddy's Home
[754]
were also financed illegally.
[756]
The production company denies wrongdoing
on that.
[759]
No wrongdoing?
There was definitely wrongdoing.
[763]
Now, you're probably wondering
[765]
how on earth
did the prime minister of Malaysia
[768]
and the kid from Up pull this off?
[770]
Well, they hired Goldman Sachs,
[772]
which gets us to Goldman's second tactic
for exploiting sovereign wealth funds.
[776]
Reputation. Whether you like them or not,
[779]
Goldman Sachs is synonymous with money,
success, and money again.
[783]
Goldman helped 1MDB appear more legit
than they actually were.
[786]
It's like awards on movie posters.
[789]
Like, you don't ever read
that leafy circle.
[791]
You just trust it once you see it.
[792]
It could say anything in there,
and in this case,
[795]
that leafy circle was Goldman Sachs.
[798]
Now, here's how it went down.
[799]
Jho Low and Najib started
the sovereign wealth fund, 1MDB.
[802]
They worked primarily
with two Goldman bankers,
[804]
Roger Ng and Tim Leissner,
who helped take 1MDB to the next level.
[809]
How much of Jho Low's scheme
do you think was actually,
[812]
would have been possible
without the help of bankers
[815]
like those from Goldman Sachs?
[817]
No, that's totally right.
It would have been impossible
[820]
without the help of the enablers
in the global financial system.
[823]
I mean, the money was raised
by Goldman Sachs.
[825]
It's true. In 2012, Ng and Leissner
started helping 1MDB raise money
[829]
from investors who were told
that their money
[831]
would help pay for power plants.
[833]
The only problem was 1MDB
had no credit rating,
[836]
which made it harder
to convince people to invest.
[839]
So to make the power plant deals
look better,
[841]
Goldman Sachs used their credibility
and paired 1MDB up
[844]
with Abu Dhabi's sovereign wealth fund,
IPIC, which had $70 billion
[848]
in assets and solid credit.
[850]
All of this
was their verified blue check mark
[853]
and investors saw that package,
Goldman, IPIC, and 1MDB and they bought in.
[858]
Over the next year,
Goldman raised $6.5 billion for 1MDB,
[862]
but instead of all of it going
into power plants,
[865]
Jho Low allegedly siphoned off
$1.4 billion into a shell company.
[870]
From there, the money allegedly went
to pay off everyone who helped.
[874]
It also paid for Daddy's Home,
Oompa Loompas, and Miranda Kerr's piano,
[877]
and Goldman walked away with $600 million
in fees and revenue.
[882]
Now, we reached out to Goldman Sachs
to ask them about these fees,
[886]
and they said the fees and revenue
were fair given the risk assumed.
[889]
But reporters say that $600 million
[892]
is 200 times what they would normally make
on a deal that size.
[896]
Clearly, something shady is going on here.
Goldman used their expertise
[901]
to raise the money for 1MDB
and used their reputation
[904]
to make this scheme look legit.
[907]
Prime Minister Najib did everything
he could to cover this up.
[910]
He cracked down on reporters.
He fired officials investigating him.
[913]
He even threw a concert with Psy
[915]
to rally support
for his political party BN.
[933]
How is Psy always at the scene
of the crime?
[937]
He's the Forrest Gump
of shady Asian business deals.
[941]
In the end, the scandal
brought down Najib's entire government,
[944]
and he was arrested.
[945]
He insists he's being framed.
[947]
So he did what every wrongly accused man
does to clear his name.
[951]
He makes his own version
of “We Are the World.”
[954]
This is the saddest day of my life.
[957]
Hopes as high as a mountain,
can be crumbled into dust.
[962]
Why did such a tragic event ever happen
in my life?
[975]
That song is so bad
it created more world hunger.
[979]
Najib is on trial in Malaysia as we speak,
[983]
and Jho Low is still on the run.
[984]
What they did with Goldman
caused real pain.
[987]
Thanks to two guys,
[989]
ordinary Malaysians are stuck
with $13 billion of debt.
[993]
They have not only stolen the money
through commissions,
[996]
but they have helped
to destroy the economy
[999]
and the confidence in the system.
[1002]
Apology is not enough.
[1004]
Apology with $7.5 billion,
that is what matters.
[1008]
Goldman Sachs should understand
the agony and the trauma suffered
[1013]
by the Malaysian people.
[1015]
Roger Ng, one of the Goldman bankers,
has plead not guilty,
[1018]
but U.S. prosecutors are pushing
for a plea deal.
[1020]
Tim Leissner has already plead guilty
to conspiracy to commit bribery
[1024]
and money laundering. Goldman Sachs says
they were unaware of their activity
[1028]
and is trying to make it seem like
1MDB was the fault of rogue employees.
[1031]
But in his guilty plea,
[1032]
Leissner said, “Avoiding compliance
was part of Goldman culture.”
[1037]
And experts agree.
[1038]
Now, it's significant that the bank itself
has been targeted
[1041]
rather than just its employees.
[1043]
Because this indicates that
the Malaysian authorities believe
[1046]
that Goldman knew that
money was being misappropriated.
[1049]
This was not rogue traders.
These are very senior people.
[1053]
And it went all the way up the food chain
at the firm,
[1055]
and they should have known.
[1057]
Since 1MDB,
[1058]
Goldman Sachs has actually been
doubling down on sovereign wealth funds.
[1062]
Just last year,
they worked with Saudi Arabia.
[1065]
Now, they're working with China.
[1066]
These deals are gonna keep happening.
They're not going away.
[1070]
And that's okay,
[1071]
because sovereign wealth funds
aren't inherently bad.
[1074]
But in the wrong hands,
they can do massive damage to countries.
[1077]
That's why a criminal case against
Goldman Sachs could be so important.
[1081]
It could help set a precedent
[1083]
about how much we scrutinize
these vast pools of money
[1086]
with little to no regulation.
[1087]
Until that changes,
[1089]
there are going to be more 1MDBs
and even more Jho Lows.
[1092]
Jho Low, if you're watching,
wherever you are,
[1095]
I can't get you another $4.5 billion.
[1097]
I can't get you acquitted,
but if you turn yourself in,
[1100]
there's one thing I can get you.
[1102]
The biggest, wildest Psy concert
the world has ever seen.
[1106]
Psy, if you're watching, wherever you are,
I'm calling in that favor.
[1110]
Check your RAZR phone.
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