Court dismisses
Goldman case
over Najib ties
GOLDMAN SACHS has won the dismissal of
a US$510m lawsuit in New York that a
private-equity firm filed, accusing the Wall
Street bank of shortchanging it in a merger
to “curry favour” with the Malaysian prime
minister.
In a decision made public on November
17, Justice O Peter Sherwood of a state
court in Manhattan said Primus Pacific
Partners’ lawsuit “had no substantial nexus
with New York”, and should be heard in
another forum.
Primus had sought damages from
Goldman and former star banker Tim
Leissner, accusing them of providing bad
merger advice in 2010 to Goldman client
EON Capital. Primus held a 20% stake in
EON.The plaintiff said the advice reflected
alleged Goldman conflicts of interest with
Malaysian PM Najib Razak and Malaysia’s
1MDB sovereign wealth fund.
A lawyer for Primus did not immediately
respond to requests for comment. Goldman
spokesman Michael DuVally declined to
comment.
Primus sued in July 2016, a week after
the US government moved to seize US$1bn
of assets bought with money it said people
close to Najib stole from 1MDB, including
some from Goldman-arranged bond
offerings.
A multibillion-dollar scandal and money-
laundering probes in at least six countries
have dogged the 1MDB fund, or 1Malaysia
Development Berhad. Najib has denied
wrongdoing.
Primus had accused Goldman of advising
EON to sell itself to Malaysia’s Hong Leong
Bank at a lower price than it could have
fetched.
It said Goldman did this to “curry favour”with Najib, who had one brother on Hong
Leong’s board, and another working for a
firm advising Hong Leong on its bid.
The lawsuit sought at least US$170m
in damages, representing Primus’ alleged
losses from the underpricing of EON, plus
at least US$340m in punitive damages.
However, in his decision dated November
9, Sherwood said Malaysia had a “greater
interest than New York” in transactions
involving sales of its banks, and had already
heard a case that Primus filed over the EON
sale.
He also said all of the alleged wrongs
stemmed from conduct in Malaysia, and
most witnesses were located outside the US.
Najib, his brothers, and 1MDB were not
named as defendants.
Primus said it learned of Goldman’s
alleged fraud in March 2016, after media
began detailing Leissner’s alleged dealings
with Najib and his eventual dismissal by
Goldman.
JONATHAN STEMPEL14 International Financing Review Asia November 25 2017People
&Markets
StanChart
targets 5%-7%
growth for CIB
STANDARD CHARTERED plans to increase
revenues at its investment bank by 5%–7% a
year as part of a plan to revive profitability
across the bank, and reckons it has turned
a corner from the mistakes of its past.
The bank, which gets 85% of its revenues
from Asia, Africa and Middle East, has spent
the past two years slashing its exposure to
bad loans, restructuring and cutting costs.
It said that has provided a foundation
to now focus on growth, which will come
from cross-selling to more clients and
taking advantage of higher economic
growth in its markets.
The bank said it expects economic
growth of 4.8% on a compound basis
through to 2022, and it expects revenues
in its corporate and institutional bank
business to outpace that.
“In the medium term, based on that GDP
outlook, a 5%–7% compound annual growth
rate of income should be achievable, with
a slightly higher rate on a risk-adjusted
basis,” said Simon Cooper, chief executive
of corporate and institutional banking. He
joined Standard Chartered in April 2016
from HSBC.
“We’ll deliver products where we
have a clear competitive strength to newand existing clients with increasingly
sophisticated financial services needs,”
Cooper said at an analyst and investor
conference.
Standard Chartered weathered the
financial crisis better than most rivals but
ran into trouble after building up massive
loans to its biggest clients, many of which
soured during the commodities downturn.
One US$1bn loan to Indonesian miningtycoon Samin Tan’s coal firm, Borneo
Lumbung Energi & Metal - the single largest
underwritten loan by any bank in Asia - was
characteristic of the firm’s error in lending
heavily to individual borrowers.
Cooper said the bank’s exposure to its
top 20 clients now represented 56% of its
Tier 1 capital, down from 83% at the end of
2014.
“We’re behaving differently to the
Standard Chartered that you may have seenin the past. Essentially we’re getting back
to the basics of banking,” he said.
In a subsequent interview with IFR and
Reuters, he said culture had changed and
a number of tools and scorecards had been
put in place for staff to keep risk within
desired parameters.
“It’s a different mindset,” he said. “We’ve
been very clear and transparent about
the strategy of the bank. People have got
scorecards, they understand what they
are being measured against and what
they will be paid against, and that creates
confidence.”NO EQUITIES RETURN
Cooper said the bank was likely to steer
clear of equities - a business line it largely
closed in 2015.
“I can’t foresee a time that we would go
back in,” he said. “That’s not to say we’re
not going to look at structured equities
within financial markets, but that’s a very
different business.”
Cooper plans to regain lost ground in
fixed income, currency and commodities.
Its FICC market share in Asia, excluding
Japan and Australia, has fallen to 8% from
13% in 2013.
Investors are hoping StanChart can
increase revenues at a greater rate than
costs rise, after a restructuring that has
axed 15,000 jobs and cut US$1.6bn of
annual revenue by removing sub-scale and
unprofitable businesses.
STEVE SLATER, LAWRENCE WHITE“It’s a different mindset. We’ve
been very clear and transparent
about the strategy of the bank.
People have got scorecards,
they understand what they are
being measured against and
what they will be paid against,
and that creates confidence.”1019_05 People and Markets.indd 14 24/11/2017 22:03: