US discussing Goldman Sachs 1MDB settlement of below US$2 billion

GOLDMAN Sachs Group Inc could end up paying less than US$2 billion (RM8.32 billion) to resolve US criminal and regulatory probes over its role in raising money for scandal-ridden Malaysian investment fund 1MDB, said three people familiar with the negotiations.

The Justice Department and other federal agencies, in internal discussions held in recent weeks, have weighed seeking penalties of between US$1.5 billion and US$2 billion, the people said. That’s less than what some analysts have signalled Goldman might have to pay. While a settlement could be announced as soon as next month, the terms could change before a deal is finalised, said the people who asked not to be named in discussing private negotiations.

The bulk of the penalties would be paid to the Justice Department. Attorney General William Barr has directly immersed himself in the case, according to another person familiar with the matter. Earlier this year, Barr obtained a waiver to let him oversee the investigation, even though his former law firm, Kirkland & Ellis LLP, is representing Goldman. It’s unclear whether the Justice Department is seeking a guilty plea from the bank.

A Justice Department spokesman declined to comment, as did spokesmen for the Federal Reserve and Securities and Exchange Commission, which have been pursuing civil investigations into Goldman. The bank reiterated its previous statements that it continues to cooperate with authorities.

Goldman Sachs shares climbed as much as 3.1 per cent on the discussions, the biggest intraday gain in almost two months. The bank’s stock is up 33 per cent this year.

Reputation blow

Goldman’s involvement with 1MDB has triggered one of the biggest blows to its reputation in recent years, leading to a litany of investigations and embarrassing revelations of a former banker bribing government officials. The Wall Street firm has been eager to move past the scandal, and a US settlement of below US$2 billion would put it on track to avoid the worst-case scenario that some analysts pegged at as much as US$9 billion in global fines.

Goldman is separately negotiating a settlement with Malaysian authorities, who have in recent discussions floated much lower figures than their public stance of wanting to recover US$7.5 billion. Goldman is still privately seeking to reduce its sanctions, arguing that the crimes were committed by a rogue employee and that the bank wasn’t aware of the misconduct.

If it pays anywhere close to US$2 billion, Goldman would join other banks that have been subjected to massive US penalties this decade. In 2012, HSBC Holdings Plc set a new bar when it agreed to pay more than US$1.9 billion to settle allegations that it violated sanctions and enabled money laundering. BNP Paribas SA was then hit with the largest financial penalty ever in a US criminal case when it paid US$9 billion over sanctions violations.

In previous international corruption cases, the US has sometimes credited penalties paid to other countries for the same conduct. For example, a US$1.3 billion US settlement last year with Societe Generale SA included a credit of almost US$300 million that was paid to French authorities.

1MDB became the hub of a global corruption and embezzlement scandal in which a massive amount of cash was allegedly diverted to corrupt officials and financiers. Goldman helped the state investment fund raise cash, with the Wall Street bank making about US$600 million from US$6.5 billion in bond sales in 2012 and 2013.

Yacht, movies

Tim Leissner, a former senior Goldman banker in Southeast Asia, admitted last year to bribery and pleaded guilty to US charges that he conspired to launder money.

Money diverted from 1MDB was allegedly spent around the world, including on a super yacht, the Hollywood movie “The Wolf of Wall Street” and high-end real estate. Authorities in several countries have been working to recoup some of the missing billions and punish those involved.

There are signs that Goldman has made progress in its negotiations with US agencies and may also have a sense of how much it might pay to settle the investigations.

For instance, Goldman stopped buying back its stock in the third quarter as it began discussions with US authorities on 1MDB. Goldman later restarted its buybacks as talks with the government progressed and the firm added US$300 million to its estimate of possible legal losses, chief financial officer Stephen Scherr said on an October conference call with analysts and investors.

Compliance failures

Goldman has previously blamed Leissner for concealing his wrongdoing from the firm’s compliance efforts. Leissner has countered that the bank’s culture of secrecy led him to bypass compliance. US authorities allege that in addition to Leissner, two other bankers were aware of the scheme, including one who went on to become the bank’s top dealmaker in the region.

Earlier this year, the Fed banned Leissner and his former deputy, Roger Ng, from the banking industry. Ng faces US accusations of money laundering and bribery, and also Malaysian charges of aiding the bank’s efforts to mislead investors. – Bloomberg

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Revealed: how the FBI targeted environmental activists in domestic terror investigations

Protesters were characterized as a threat to national security in what one calls an attempt to criminalize their actions

Dakota Access pipeline

Helen Yost, a 62-year-old environmental educator, has been a committed activist for nearly a decade. She says she spends 60 to 80 hours a week as a community organizer for Wild Idaho Rising Tide; to save money, she lives in an RV. Shes been arrested twice for engaging in non-violent civil disobedience.

Yost may not fit the profile of a domestic terrorist, but in 2014 the FBI classified her as a potential threat to national security. According to hundreds of pages of FBI files obtained by the Guardian through a Freedom of Information Act (Foia) lawsuit, and interviews with activists, Yost and more than a dozen other people campaigning against fossil fuel extraction in North America have been identified indomestic terrorism-related investigations.

The investigations, which targeted individual activists and some environmental organizations, were opened in 2013-2014, at the height of opposition to the Keystone XL Pipeline and the expansion of fossil fuel production in North America.

From
From an FBI communication on Helen Yost, dated 24 July 2014.

The new Foia documents reveal the bureaus motivation for investigating a broad cross-section of the environmental movement and its characterization of non-violent protesters as a potential threat to national security.

In 2010, the DoJs inspector general criticized the FBI for using non-violent civil disobedience as grounds to open domestic terrorism investigations. US citizens swept up in such investigations can be placed on terrorism watchlists and subjected to surveillance and restrictions on international travel. The designation can also lead local law enforcement to take a more confrontational approach when engaging with non-violent activists.

The FBIs 2013-2014 investigation of Keystone XL activists in Houston violated internal agency guidelines designed to prevent the bureau from infringing on constitutionally protected activities. The investigations opened in 2013-2014 were closed after the FBI concluded that the individuals and organizations had not engaged in criminal activity and did not a pose a threat to national security.

In 2015, the Obama administration rejected the Keystone XL pipeline project, which required state department approval because it would cross international borders, handing the environmental movement a major victory. More large-scale protests followed, including the standoff over the Dakota Access pipeline, which temporarily delayed the project.

But those decisions have been reversed in recent years. Donald Trump has approved construction of the Keystone XL and Dakota Access pipelines, and his administration has also advocated for stiffer penalties against activists who engage in non-violent direct action targeting fossil fuel infrastructure. Meanwhile, in the wake of the Standing Rock protests, seven states have passed legislation making it a crime to trespass on property containing critical infrastructure.

In its July 2014 file on Yost, the FBI cited federal anti-terrorism legislation prohibiting attacks and other violence against railroad carriers as the primary justification for opening the investigation. Violation of the law can lead to up to 20 years in prison. Activists who engage in non-violent civil disobedience and are charged with minor offenses such as trespassing are typically released within 48 hours.

The FBI characterized Yost as being driven by a desire to stop fossil fuels which, in her political view, are destroying parts of the US, specifically Montana, Idaho and Washington. In addition, the FBI discussed the case with the US attorneys office in Idaho, local law enforcement, and BNSF Railway, which operates the main rail line delivering coal and oil to export terminals in the Pacific north-west.

FBI
From an FBI communication on Helen Yost, dated 24 July 2014.

According to the FBI file, the bureau opened the investigation based on information that Yost was organizing and planning on conducting illegal activities against railroad companies from Montana into Idaho and Washington.

Yost said Wild Idaho Rising Tide (WIRT) never organized direct action protests to disrupt oil train traffic passing in the region. The heavily redacted Yost investigation concludes that no potential criminal violations or priority threats to national security warranting further investigation were identified.

WIRT did participate in a series of community-led events and workshops in July and August 2014 opposing the transport of oil and coal by rail. Investigators may have conflated several community events to assume such fictitious allegations, Yost said in an email.

For several years, WIRT, founded in 2011, had been publicizing its actions on the organizations Facebook page. Much of its activity had focused on stopping the passage of huge trucks known as megaloads, which transport processing equipment to tar sands oil fields in Canada and weigh hundreds of thousands of pounds, along one of Idahos scenic byways.

The campaign involved posting public records on the megaload routes, tracking their progress, and at times blockading their movement.

Yost was also active in protesting against the shipment of coal and oil by rail to export terminals in Seattle. In the summer of 2014, WIRT, along with several other environmental organizations and native groups across the Pacific north-west, sponsored a series of rallies and workshops in the region.

Those protests were peaceful a handful of activists in Montana including the environmental writer Rick Bass were arrested for trespassing and in the end the FBI concluded that Yost did not pose a threat to national security. Several months later the investigation was closed.

However, in the file closing the case, it appears that Yost has been watchlisted, which is standard for named subjects of FBI domestic terrorism investigations, according to Mike German, a former FBI agent who is now a fellow with the Brennan Center for Justice. Being watchlisted can lead to heightened scrutiny from law enforcement and delays or additional screenings when traveling. Yost said she had not traveled overseas since the FBI investigation.

Yost, who was contacted by an FBI agent when the case was still active, said she was not surprised by the agencys actions. Surveillance was a form of suppression, she said, and this was another attempt to criminalize the actions of normal people working to protect natural resources. But she remains undeterred.

Assume they know the color of your underwear every morning and get up and resist anyway, Yost said.

Herb Goodwin, a 70-year-old activist, has a similar philosophy. Were all under surveillance, Goodwin said. If they want to look at your stuff, theyre going to.

In 2013-2014 Goodwin frequently participated in actions organized by Yost and WIRT. He was also part of the Occupy Wall Street protests in Bellingham, Washington, in 2011 and was one of 12 individuals arrested that year for blockading a BNSF coal train passing through the city. They became known as the Bellingham 12.

Goodwin was one of at least a dozen environmental activists, many of them affiliated with the group Deep Green Resistance, contacted by FBI agents in autumn 2014. In early October that year, not long after Goodwin returned from a megaload resistance campaign in Idaho, an FBI agent and a police intelligence officer showed up at his residence.According to Goodwin, they wanted to ask him questions about the environmental group Deep Green Resistance. Goodwin refused to cooperate and referred the agents to his lawyer, who himself became a subject of interest to the FBI.

Founded in 2011 Deep Green Resistance (DGR), based on the principles laid out in the book of the same name, describes itself as a radical organization that uses direct action in the fight to save the planet. Though the group supports underground movements, its members abide by a code of conduct that includes a commitment to nonviolence and operating entirely above-ground. According to the groups website, We do not want to be involved in or aware of any underground organizing. In another FBI interview with a DGR member documented in the files, the activist even invited the agents to attend one of DGRs presentations.

FBI files show that the bureau initiated the two-year investigation into DGR to determine if the group or any of its members were planning to engage in the destruction of energy facilities or attacks against railroad companies, referring to the same federal statute cited in the Yost investigation.

But the FBI also took an interest in constitutionally protected activities, including DGR members participation in public meetings and lectures and the groups early organizing efforts.

Even though the FBI investigation found no evidence that DGR was planning to engage in violent activity, it often portrayed the group as an extremist organization. One individual contacted numerous times by the FBI was said to have been a suspected member of the Deep Green Resistances extremist wing and a participant in DGRs Midwest extremist planning process. DGR did have a strategic planning conference in Wisconsin in spring 2012 which they said was attended by about 30 people, but it was publicly advertised and focused on building the organization, fundraising and leadership training.

From
From an FBI communication on Deep Green Resistance, dated 28 November 2014.

The FBI also focused its attention on DGR organizing at Western Washington University, which hosted a lecture in 2011 by two of the groups members, Max Wilbert and Dillon Thomson. Information about the lecture, titled Environmentalism for the New Century, and about the professor who hosted it was included in the FBI files. Wilbert, who attended WWU, is also a member of DGRs board of directors.

As part of the investigation, the FBI met with the universitys police department to discuss possible Deep Green Resistance presence on the WWU campus. The FBI also said it would attempt to determine whether any of the professors in the environmental sciences department were involved in the DGR movement.

FBI
From an FBI communication on Deep Green Resistance, dated 21 November 2013.

The sweeping investigation into DGRs activities was formally closed in 2014 but Wilbert assumes that the group is still being closely watched. Wilbert, who is also a writer and photographer, frequently posts short polemical essays on his Facebook page or the Deep Green Resistance website.

Wilbert said that on 7 September 2018, nearly four years after the investigation was closed, he got a call from an FBI agent in Seattle informing him that the bureau had received an anonymous tip regarding something he had written online. The agent also left a card at Wilberts parents home.

Im pretty outspoken about being a revolutionary, somebody who believes in the necessity for revolutionary change, Wilbert said. Its not something I hide.

An FBI file documenting the online tip describes Wilbert as an environmental extremist involved in inciting violence in Seattle.

German, the former FBI agent, whose recent book, Disrupt, Discredit, and Divide, chronicles the troubling post-9/11 expansion of the FBIs domestic surveillance powers, said the agency had failed to heed the warnings laid out in a 2010 justice department IG investigation that criticized the FBIs targeting of certain domestic advocacy groups. According to German, the Yost files and the two-year DGR investigation show how ineffective these internal oversight mechanisms are to preventing abusive and wasteful investigations of non-violent protesters.

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Whistleblower says White House tried to cover up Trump’s abuse of power

news

Washington (CNN)President Donald Trump abused his official powers “to solicit interference” from Ukraine in the upcoming 2020 election, and the White House took steps to cover it up, according to a stunning whistleblower complaint released Thursday.

The complaint has been at the center of a controversy that has spurred Democrats to launch a formal impeachment inquiry. The White House on Wednesday also released a rough transcript of the call that shows Trump repeatedly pressed Ukraine to investigate former Vice President Joe Biden and his son, Hunter.
Caving to Democratic demands, the Trump administration let Congress release a declassified version of the complaint, one day after releasing a rough transcript of the Trump-Zelensky call. The developments triggered a flood of Democratic lawmakers to publicly support impeachment.
    Trump has maintained that he didn’t do anything wrong, while simultaneously promoting unfounded conspiracy theories about the Bidens, Ukraine, and Russian meddling in 2016.
    There is no evidence of wrongdoing by either Joe or Hunter Biden.

    White House lawyers asked to remove transcript

    politics
    The complaint notes White House lawyers were “already in discussion” about “how to treat the call because of the likelihood, in the officials’ retelling, that they had witnessed the president abuse his office for personal gain.”
    White House lawyers also directed officials to remove the transcript of the call from a computer system that stores them for Cabinet-level officials and instead put the transcript in a system for especially sensitive information, the whistleblower alleges.
    This move concerned some officials, who shared their worries internally that this was an “abuse of the system.”
    The whistleblower said they heard from other White House officials that this was “not the first time” that the Trump administration used this storage system to hold politically sensitive documents. The codeword-level system is meant to hold files of national security importance.
    There weren’t additional details in the complaint, and some of the details came from secondhand sources. Republicans on Capitol Hill have used that point to question the veracity of the complaint, though the intelligence community inspector general already deemed it credible.

    Rudy Giuliani’s role worried State Dept officials

    US officials were concerned, the whistleblower said, with Trump’s private lawyer Rudy Giuliani and his contacts with Ukrainian officials. The whistleblower alleges the US officials believed Giuliani was a conduit for messages between the President and officials in Kyiv and that he was at the helm of a problematic “circumvention of national security decisionmaking processes.”
    For most of the past two years, Giuliani has played a peculiar role as Trump’s personal attorney, a pro-Trump surrogate on television, and as an informal diplomat of sorts. This year, he has used his position to promote conspiracy theories about Ukraine, Biden, and the 2016 election.
    Whistleblower says White House tried to cover up Trump's abuse of power - CNNPolitics
    The whistleblower said they heard that two State Department officials intervened with Giuliani in an effort to “contain the damage” he was doing to national security. The complaint also said US diplomats worked with the new Ukrainian leaders to help them navigate the strange situation, where they juggled outreach from Giuliani with US diplomacy coming through official channels.
    State Department officials met with Ukrainian political figures and provided advice “about how to ‘navigate’ the demands that the President had made of” Zelensky, the whistleblower wrote.
    Little is known about the identity of the whistleblower, which is even still hidden from some of the most senior US intelligence officials. The Justice Department has said there are some indications that the whistleblower opposes Trump’s reelection, but the complaint was indeed credible. They used lawful channels to file the complaint and get the message to Congress.

    Trump potentially exposed to blackmail

    In a letter accompanying the whistleblower’s complaint, Intelligence Community Inspector General Michael Atkinson wrote that the alleged conduct by Trump “would also potentially expose” the President “to serious national security and counterintelligence risks with respect to foreign intelligence services aware of such alleged conduct.”
    The implication is that US adversaries are always spying on the US and trying to intercept sensitive phone calls by US officials. If a hostile government possesses a recording or is aware of the details of Trump’s phone call, they could use it to blackmail Trump. The gravest risk is from Russia, which is essentially at war with Ukraine and has strong intelligence capabilities.
    news
    Atkinson also wrote in his letter that that the whistleblower’s complaint amounts to a “serious or flagrant problem [or] abuse” under US laws regarding the inspector general’s office.
    The comments were made in an August 26 letter sent to acting Director of National Intelligence Joseph Maguire. Atkinson explains the reasoning behind his determination that the information amounted to an “urgent concern,” which triggered its eventual transmission to Congress.

    Whistleblower confused by Trump’s CrowdStrike interest

    The whistleblower expresses confusion about Trump’s references to CrowdStrike during his calls with Zelensky. The Democratic National Committee hired CrowdStrike in 2016 to investigate hacks to its computers, which were later blamed on the Russian government.
    In the call, Trump mentioned the US cybersecurity firm and said, “the server, they say Ukraine has it.” Trump also encouraged Zelensky to “find out what happened” with the server.
    “I do not know why the President associates these servers with Ukraine,” the whistleblower wrote in a footnote. The whistleblower added that Trump had previously connected the DNC server to Ukraine in television interviews.
    Trump’s interest in CrowdStrike and the DNC server, more than three years after the hacks, is part of a larger effort to undermine the notion that Russia meddled in the 2016 election to help him win. He has repeatedly rejected the assessment from CrowdStrike, which was later confirmed by US intelligence agencies, that Russia was behind the DNC hacks and leaks.
    politics
    The complaint demonstrates in stark terms how people who work inside the US government, with access to highly sensitive materials, have struggled to figure out what was going on in an unconventional White House administration with a president who goes around official channels.
      The complaint contains a blend of information that was observed firsthand, details that were provided secondhand from other officials, and information that comes from public sources, like Giuliani’s appearances on television and news articles about his activities surrounding Ukraine.
      This story is breaking and will be updated.

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