NEW YORK • When Malaysian premier Najib Razak visited New York in September 2013, a senior Goldman Sachs Group official went out to greet him.
At the time, that would have seemed fitting: Malaysia had been good to Goldman. Three bond offerings from the country’s 1Malaysia Development Berhad (1MDB) wealth fund, controlled by Najib, had already generated about US$600 million (S$820 million) in fees for the bank.
But now, previously unreported details of that gathering at the Time Warner Centre overlooking Manhattan’s Central Park could prove damaging for Goldman.
A federal filing unsealed last Thursday places Najib and a “high-ranking executive” from the bank in a meeting with several people the United States now accuses of a massive global fraud – including a Malaysian financier who had been repeatedly flagged by the bank’s compliance teams.
Attendees included the Goldman banker who had arranged the bond offerings, Tim Leissner, who has now admitted to the US authorities that he conspired to bribe officials to get the deals done and accepted some US$200 million of the proceeds into accounts he controlled.
Also present was Low Taek Jho, the Malaysian financier also known as Jho Low, who the US accuses of masterminding the scheme to divert billions of dollars from 1MDB to private accounts and purchases of fine art and high-end real estate.
TIM LEISSNER – Former Goldman Sachs South-east Asia chairman
Pleaded guilty to conspiracy to launder money embezzled from 1MDB and violating foreign anti-bribery laws.
NG CHONG HWA – Ex-Goldman Sachs managing director
Indicted on three counts of conspiring to violate foreign anti-bribery laws and to launder money, arrested in Malaysia at the request of US authorities.
LOW TAEK JHO – Malaysian financier
Accused of masterminding a scheme to divert billions of dollars from 1MDB to private accounts and purchases of fine art and high-end real estate.
NAJIB RAZAK AND ROSMAH MANSOR – Former Malaysian prime minister and his wife
Both face 1MDB-linked charges in Malaysia.
By the time the top Goldman executive met Najib and Low on that sunny Wednesday in September, Leissner had been asked – and had denied – multiple times whether Low was involved in the 1MDB offerings, according to US filings.
Several compliance officers at Goldman had also shot down Leissner’s efforts to bring Low on board as a client. Yet there was Low, an effervescent networker whose free-spending exploits were already tabloid fodder.
That was not the end of Low’s work in New York. Three days later, he returned to the Time Warner Centre, where Najib was staying at the Mandarin Oriental hotel, according to the federal filing, an FBI special agent’s affidavit filed under seal in June.
There, Low and a jeweller presented Najib’s wife, Rosmah Mansor, with a custom-made 22-carat pink diamond pendant and necklace, according to court documents. The jewels cost US$27.3 million.
The money came from funds that were raised by Goldman for 1MDB and then diverted into accounts controlled by Low, according to the filings.
The US filings do not identify many of the participants at the meeting by name. Leissner, Low, Najib and others are identifiable from previously disclosed details. The documents include several other references to senior Goldman officials who are not identifiable, including the one at the Time Warner Centre meeting.
It is unclear whether those references are to the same high-ranking banker or to several, and the filings do not say whether the executives were aware of the bank’s long-running warnings about Low. There is no evidence that the executive at the Time Warner Centre meeting had knowledge of the necklace delivered days later.
Former Goldman Sachs banker Tim Leissner could be a crucial guide for global investigations into how a majority of the US$6.5 billion raised by Goldman, ostensibly to promote development in Malaysia, was allegedly diverted in one of the largest plunderings of public funds in history.
Federal prosecutors in Brooklyn, who are running the probe, likely have a broader view. Leissner’s admission of bribery and laundering conspiracy came in a document called a criminal information, which often suggests a cooperation deal with the authorities.
If that is the case, Leissner could be a crucial guide for global investigations into how a majority of the US$6.5 billion raised by Goldman, ostensibly to promote development in Malaysia, was allegedly diverted in one of the largest plunderings of public funds in history.
The latest documents may mean Goldman’s reckoning over the 1MDB affair is far from over.
Last Thursday, the bank placed Mr Andrea Vella, its former co-head of investment banking, on leave. Court documents unsealed earlier in the day said an unidentified Goldman official in Asia conspired with Leissner, Low and another then-Goldman banker, Ng Chong Hwa also known as Roger Ng, and had knowledge that bribes were being paid. Prosecutors’ description of the official lines up with that of Mr Vella, who could not be reached for comment.
Goldman has previously said it believed the money it was raising for 1MDB would be used for development projects.
Mr Lloyd Blankfein, who stepped down as Goldman Sachs’ chief executive officer last month, told an audience in New York last Thursday that he did not know of senior managers missing red flags in the 1MDB dealings.
“I am not aware of them, but I am not in a position to refute facts that I don’t have a complete picture of,” Mr Blankfein said. “We’ve asked for this information also, and we don’t have it,” he said, adding that the matter was an issue of a few employees dodging bank controls and lying about it.
The Time Warner Centre meeting came at the tail end of nearly a half-decade of duelling impulses within Goldman, according to government filings.
On the one hand, compliance officials across the globe were issuing warnings about Low. On the other, Leissner, Ng and some others in Asia were playing fast and loose, hiding their involvement with Low even as they aggressively pursued Malaysian business with him.
The business culture at the bank, “particularly in South-east Asia, was highly focused on consummating deals, at times prioritising this goal ahead of the proper operation of its compliance functions”, the US government wrote.
CULTIVATING TIES WITH LOW
Leissner and Ng’s relationship with Low went back to 2009, when Goldman and other big banks were digging out of the global financial crisis. Leissner and other Goldman bankers sought to cultivate ties with Low to win business with the Malaysian wealth fund, then known as Terengganu Investment Authority.
Even then, Low was gaining dubious attention. “Big-Spending Malaysian Is The Mystery Man of City Club Scene”, the New York Post wrote in November 2009.
Chronicling US$160,000 in bar tabs rung up by the then 20-something Malaysian, it said Low had “burned through hundreds of thousands of dollars at the city’s hottest night spots in the last three months – and shows no signs of stopping”.
That same month, with 1MDB – a new Malaysian wealth fund – up and running, Leissner was eager to capture its business for Goldman. He e-mailed Ng and suggested helping to build up Low’s credentials as a successful businessman, by having 1MDB find a company to buy.
Leissner also sought to curry favour with Najib, who as prime minister appointed 1MDB’s board.
‘NO ROLE’ FOR LOW
Goldman held its first bond sale for 1MDB in May 2012, raising US$1.75 billion. Of that, about US$577 million was diverted to bank accounts controlled by an Abu Dhabi investment firm, according to court filings.
From there, about US$295 million was transferred to a shell company controlled by Low. In the ensuing weeks, an account controlled by Leissner and his former wife, a Chinese national, received deposits of the 1MDB cash – US$35 million, and then another US$16.9 million.
The month after the first bond sale, a Goldman compliance official e-mailed members of Leissner’s team, asking if Low was involved in the transaction. “Please keep us posted if there are any other politically exposed persons involved in this transaction in a non-official capacity,” the official wrote.
Low was not involved, an unidentified executive director on Leissner’s team wrote.
Over the next year or so, Goldman arranged two more fundraising rounds for 1MDB. Like the first, these were bond offerings, which generated higher fees for the bank than other forms of capital raising, Leissner said in his admission.
In all, Leissner said in his guilty plea, more than US$200 million flowed into accounts controlled by him and his former wife, as part of a global flow of money that also allegedly bought a luxury yacht, paid for a movie production and bought jewels for Low’s love interests.
The next September brought Leissner, Low, Najib and the high-level Goldman executive together in New York, along with another 1MDB official and a relative of Najib’s. The purpose of the meeting, according to the FBI agent’s affidavit: To discuss more business opportunities for Goldman in Malaysia, including with 1MDB.
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