According to a report in the New York Times, Goldman Sachs bankers have been successfully brought to heel regarding their part in a massive multi-billion dollar embezzlement scheme in league with former Malaysian PM Najib Razak, who used proceeds from the scandal to purchase luxury…
According to a report in the New York Times, Goldman Sachs bankers have been successfully brought to heel regarding their part in a massive multi-billion dollar embezzlement scheme in league with former Malaysian PM Najib Razak, who used proceeds from the scandal to purchase luxury items and fund an extravagant lifestyle.
There’s nothing overly special about the scandal. It’s something that happens quite frequently in current — or shall we say “legacy” — financial systems. Razak created and oversaw a “sovereign wealth fund,” and with the help of Goldman Sachs bankers, embezzled and misused the funds in outlandish ways including the purchase of a Picasso.
The prime minister received nearly a billion dollars of the funds in his own private bank account, enriching himself to such an extreme that he was for a time extremely wealthy by any standard. Ironically, US federal prosecutors seem to be doing the most in response to the criminal activities, prosecuting at least two Goldman bankers thus far, one of whom has reportedly already pleaded guilty.
This is, of course, not Goldman’s first instance of misconduct. At the same time, when we look around the banking industry, nearly everyone has dirty hands in one way or another. If only there were some kind of technology which forced transparency and inherently prevented fraud — what’s that, Goldman Sachs? blockchain, you say?
An important passage from the NYT report reads [emphasis added]:
“The authorities said that at least one high-ranking executive in the bank’s Asian operations was aware of the scheme, which dodged Goldman’s systems to detect the payment of bribes. That person, unidentified in the court filings, has not been charged. According to three people familiar with the matter, the executive was Andrea Vella, who was the co-head of Goldman’s Asian investment banking business.”
This passage is important because it illustrates that the traditional banking sector actually does want what we have natively in the cryptocurrency and blockchain space: methods of preventing fraud and misuse of funds. Opaque practices and institutions always have and always will present the opportunity for fraud and abuse. Transparency, as is innate in all public and most private blockchains, is a fundamental remedy to such situations. Essentially, we suggest that such fraud as was conducted by the agents of 1Malaysia Development Berhad (1MDB) is basically impossible to get away with in a blockchain enabled ecosystem.
Certainly the criminal element will forever develop ways to get around anything that intends to keep them honest, but actually getting away with it long enough to steal three-quarters of a billion dollars is pretty unlikely. AI via neural networks could be trained to watch for behavior that frequently resulted in fraud, and such disgraceful incidents as this, where a despot utilized his power to secure many millions of dollars, and private bankers aided him in pursuit of hundreds of millions in fees, would as a start be less attractive to attempt.
It took two years for any sort of justice to be served. Two men besides Tim Leissner, the banker who has already plead guilty, were allegedly involved. One of them has yet to be arrested, meaning it could be a couple more years before the matter is finally resolved. The bottom line is: if a conspiracy of this size only required that many participants, then there is plenty of other good medicine the blockchain can delivery via multi-signature smart contracts and other crypto applications
One thing is for sure: no Bitcoiners were harmed during the making of this scandal.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
Images from Shutterstock
Last modified: January 24, 2020 10:55 PM UTC