PETALING JAYA, Nov 22 — Banking firm Goldman Sachs Group Inc’s chief executive Lloyd Blankfein had met privately with fugitive financier Low Taek Jho in December 2012, New York Times (NYT) reported today.
The revelation undermines the bank’s argument that only rogue employees were responsible for the bank’s involvement in the 1Malaysia Development Berhad (1MDB) scandal that is threatening to engulf one of the most storied investment banks on Wall Street.
The newspaper, quoting sources, said Blankfein and the man known as Jho Low had met at the Goldman headquarters in Lower Manhattan, New York, in mid-December 2012 for a “one-on-one sit-down”.
The report pointed out that in the three years prior to the meeting, the bank’s compliance staff had repeatedly rebuffed Low’s attempts to become a client of the bank as it was unclear how he had amassed his wealth.
Blankfein and Low also had a meeting which was attended by Mohamed Ahmed Badawy Al-Husseiny, who ran an Abu Dhabi investment fund, Aabar Investments, the report said.
Mohamed Ahmed Badawy was accused of accepting bribes in a suit brought against Goldman Sachs and its former officials by Abu Dhabi’s International Petroleum Investment Company (IPIC) in a New York Court yesterday.
The Middle Eastern fund alleged that they had conspired against IPIC and Aabar, which is its subsidiary, through 1MDB.
Today, former prime minister Datuk Seri Najib Razak, who had set up 1MDB, conceded that if the allegations in IPIC’s suit were true “then maybe Jho Low has conspired with Goldman Sachs and IPIC’s top management to cheat the company.”
The Malaysian government had on October 30 said that it will ask the United Kingdom courts to set aside a May 9, 2017 consent award by an arbitration tribunal in London for 1MDB to pay US$5.78 billion (RM24.1 billion) to IPIC and the bond trustee over a five-year period.
It also said it would ask the UK courts to affirm that it has a right to recover the US$1.46 billion already paid, and that the country was relieved from paying the remaining sum to either IPIC or Aabar as 1MDB was allegedly defrauded by Najib.
Najib is facing 38 charges of corruption, money laundering and criminal breach of trust related to 1MDB and a former subsidiary.
The NYT report also said that three years before Blankfein’s private meeting with Low, the banker had attended a meeting with Low and Najib but according to sources, it was mainly a chance for Blankfein to meet government leaders and it was possible that he did not interact with Low at that time.
Citing sources, the newspaper said former Goldman South-east Asia chief Tim Leissner, who has pleaded guilty to bribery and money-laundering charges in connection with 1MDB bond deals, had facilitated the private meeting between Low and Blankfein.
It added that though Low’s name did not appear on the 1MDB bond deal, Leissner had in his recent plea deal with the US Department of Justice (DoJ) said that the fugitive financier was a key intermediary in negotiating the transaction with Goldman.
“Leissner said that he ignored warnings from the bank’s compliance team about Low and that he lied to Goldman officials who asked him whether Low was involved,” the report said.
Citing court documents, the New York Times said Goldman’s compliance team had identified Low as someone the bank should avoid working with on any 1MDB transactions.
NYT quoted John Pang, who once worked for Najib’s administration and was an adviser on the deal involving Leissner and Goldman, as saying that 1MDB was “dodgy from the beginning.”
“There is no excuse for not knowing this fund had to do with Najib’s political patronage and his election plans. This was an open secret,” he had reportedly said.
The report said Goldman ultimately helped 1MDB sell more than US$6 billion in bonds to investors, earning about US$600 million in fees.
On Nov 1, the DoJ indicted Leissner’s former colleague, Malaysian Ng Chong Hwa and Low over funds misappropriated from 1MDB and bribing various Malaysian and Abu Dhabi officials.
The three-count indictment accuses Low of misappropriating money from 1MDB and using it for bribes and kickbacks to foreign officials, to purchase high-end real estate, art and jewellery in the US, and to fund Hollywood movies including The Wolf of Wall Street.
Ng, who has agreed to surrender US$29 million linked to 1MDB, is currently in the custody of Malaysian police and is expected to be extradited before the end of the year.
Penang-born Low, however, is still at large. Malaysian authorities believe he is hiding in China.
