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Was It Smart For The DOJ To Cite E-Smart?

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As highlighted in yesterday’s post, the DOJ recently filed a brief in response to Ng Chong Hwa (Roger Ng’s) motion to dismiss a criminal indictment against him in connection with his alleged involvement in bribery schemes involving various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB).

In the brief, the DOJ sets forth its views on the FCPA’s internal controls provisions (believed to be the first instance in the FCPA’s 40+ years in which the DOJ has set forth its internal controls views in a contested matter).

The FCPA space has long know about SEC v. Worldwide Coin (a rare instance in which a court was tasked with substantively construing the books and records and internal controls provisions – see here for the prior post). In addition to citing this case in its brief, the DOJ also cited SEC v. E-Smart Technologies, 82 F.Supp.3d 97 (D.D.C. 2015).

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DOJ Responds To Ng’s Motion To Dismiss – Lays Out Its View On Internal Controls

RogerNg

This recent post highlighted former Goldman Sachs executive Ng Chong Hwa (Roger Ng’s) motion to dismiss a criminal indictment against him in connection with his alleged involvement in bribery schemes involving various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.

As highlighted in the prior post, Ng argues that the DOJ’s case against him suffers from several factual errors and legal deficiencies such as whether he was an agent of an “issuer” as well as the proper scope of the internal controls provisions.

Recently, the DOJ filed a response brief stating in pertinent part:

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Ng Files Motion To Dismiss

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As highlighted in this prior post, in November 2018 the DOJ criminally charged former Goldman Sachs executives Tim Leissner and Ng Chong Hwa (Roger Ng) (along with Low Taek Jho – Jho Low) with Foreign Corrupt Practices Act offenses for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.

Leissner pleaded guilty and in October Goldman Sachs resolved a net $1.66 billion FCPA enforcement action based on the same conduct. (See additional posts here and here).

Ng is mounting a defense and recently filed this motion to dismiss (an entire section of which is redacted). As highlighted below, Ng argues that the DOJ’s case against him suffers from several factual errors and legal deficiencies. Ng also suggests that the DOJ scripted Leissner’s guilty plea and that Goldman’s DPA was entered into for reasons of risk aversion and otherwise compromises his ability to defend himself.

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Friday Roundup

Roundup

Banking bar, Kokesh related, OECD shaming, quotable, downfall, and listening in. It’s all here in the FCPA roundup.

Banking Bar

The Federal Reserve recently announced “that it is prohibiting Tim Leissner and Ng Chong Hwa, also known as Roger Ng, from the banking industry for their participation in a scheme to illegally divert billions of dollars from a Malaysian sovereign wealth fund. Leissner was also fined $1.42 million and consented to the permanent ban.”

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What Does This Mean For Goldman Sachs?

Goldman

This post highlighted recent criminal charges against former Goldman Sachs employees Roger Ng and Tim Leissner for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.

The question thus arises: what does this mean for Goldman?

In both the Ng indictment and Leissner information the DOJ clearly asserts, on several occasions, respondeat superior allegations. In other words, that Ng and Leissner (as well as certain other unindicted co-conspirators at Goldman) were employees and agents of Goldman and while acting within the scope of their employment with the intent, to at least in part, benefit Goldman engaged in various conduct. Moreover, as a result of the conduct, the DOJ alleged that Goldman earned approximately $600 million in fees and revenue.

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