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Former
Goldman Sachs
Managing Director Lloyd Blankfein attended two meetings with a Malaysian financier at the center of one of the biggest financial scandals in the world, including one after the Wall Street bank's compliance department had raised numerous Concerns about the background of the financier and stated that the bank should not do business with him. him.
The financier, Jho Low, was indicted this month by the US Department of Justice and for helping to steal billions of dollars from 1Malaysia Development Bhd., An investment fund that he helped to run in slides. The Justice Department also alleges that two Goldman Sachs bankers participated in the scheme by concealing their collaboration with Low in the management of Goldman in New York.
The meetings held in 2009 and 2013 to allow Mr. Blankfein to meet Najib Razak, then Prime Minister of Malaysia, included discussions on 1MDB, according to people familiar with the meetings.
With the indictment of two former Goldman Sachs bankers, accused by US prosecutors of paying bribes, stealing and laundering money from a Malaysian sovereign wealth fund, the giant Wall Street is at the center of one of the biggest financial scandals in the world. Photo: Reuters
A Goldman spokesman said that Mr. Blankfein had met many people during his 12-year term at the top of the bank, unaware that the leader of Malaysia would bring Mr. Low to one or the other meeting. Mr. Blankfein does not remember meeting with Mr. Low, he said. There is no indication that Mr. Blankfein was aware of the bank 's compliance concerns with respect to Mr. Low at the time.
Interviewed last week at a public forum on the developing scandal, Mr. Blankfein accused dishonest employees. "They are guys who escaped our guarantees and lied," he said.
The Department of Justice is continuing its investigation of Goldman's role in the 1MDB scandal, including which bankers knew about Goldman's interactions with Low and how the bank dealt with the issue once she had known of the alleged fraud. The bank is also investigating hundreds of thousands of pages of emails, calendars and travel logs of employees involved in transactions.
Goldman helped 1MDB raise more than $ 6.5 billion through three bond issues in 2012 and 2013 and thus generated profits of around $ 600 million. According to the indictment of the Department of Justice, more than half of the money collected would have been stolen by Mr. Low and other people. The bank said it could not know what would happen to the money it helped to collect.
Low, who according to the Malaysian government is in China, has denied any wrongdoing.
Tim Leissner, Goldman's former president for Southeast Asia, pleaded guilty in August to conspiring to launder money and violating foreign bribery laws for helping siphon billions of dollars dollars in bond trading, according to information released last week. Former Goldman chief executive, Roger Ng, has been charged with conspiring to violate foreign bribery laws and launder money, according to three counts.
A lawyer for Mr. Leissner declined to comment on the indictment. Mr. Ng, who is under arrest in Malaysia, could not be reached.
The indictment also named an "Italian citizen" of Goldman as co-conspirator who allegedly concealed Mr. Low's interest in 1MDB in the bank's management in New York. Andrea Vella, a Hong Kong-based partner who helped structure the 1MDB bonds and became the co-lead of the investment bank in Asia.
Goldman put Mr Vella on leave after the indictment was opened last week. He had been deprived of his leadership responsibilities two weeks earlier in a management upheaval. Mr. Vella, who was not charged with any fault, did not respond to a request for comment.
In 2015, after news of 1MDB surfaced in the international media, Goldman made the decision to downsize its Singapore office, with which a large portion of 1MDB's bond transactions had been executed.
One of the executives on a list of people to lay off at the time, a Swiss national named Cyrus Shey, who had worked closely with Mr Vella on 1MDB's obligations, was unhappy to be fired, according to someone close to the record. .
An archive photo of Jho Low, the fugitive Malaysian financier who is believed to be in China.
Photo:
Stuart Ramson / Associated Press
Mr. Vella told his colleagues at Goldman that he was concerned that Mr. Shey would publicly disclose information about 1MDB at a time of the in-depth review of the situation, and he ensured that Mr. Shey was not immediately released, according to this person. Shey then obtained a $ 1.5 million private loan from Mr. Leissner, who was then Goldman's president for Southeast Asia, said the manager. Mr. Leissner left the bank in early 2016.
Mr. Shey did not answer the questions. His lawyer stated that Mr. Shey had never planned to discuss 1MDB in public; The lawyer did not answer questions about Mr. Leissner's private loan.
Mr. Leissner and his attorney did not respond to requests for comments for this article.
The indictment of the Ministry of Justice alleges that MM. Leissner and Ng sought to conceal their activities by repeatedly assuring Goldman executives that Low was not involved in their work with 1MDB, even though he was constantly coming back to meetings.
The first meeting attended by Mr Blankfein in November 2009, at the Four Season Hotel in New York, was organized by MM. Leissner and Ng for Goldman for the purpose of seeking a contract with 1MDB, according to an affidavit made public by an FBI agent involved in the investigations.
Two months earlier, Mr. Leissner had attempted to obtain an account with Mr. Low's private Goldman bank in Switzerland, but the case was denied because of compliance issues related to the source of wealth. from Mr. Low, indicates the affidavit. The presence of Mr. Blankfein alongside Mr. Low and then Prime Minister Najib at the 2009 meeting was first reported by Bloomberg.
In subsequent years, as Goldman helped 1MDB raise funds, Low's role in the fund was a constant source of concern for compliance officers and bank attorneys in New York. the affidavit. Two former Goldman executives based in Asia said Low's role in the fund was the subject of much discussion in the office.
Counsel and members of the Goldman committees with reseller agreements constantly asked Mr. Leissner by e-mail and at meetings whether Mr. Low was involved. On several occasions, Mr. Leissner denied that Mr. Low played any role, according to the affidavit.
In March 2013, Goldman sold the last of three bonds for 1MDB. On March 10, just over a week before the $ 3 billion bond issue, a New York-based committee meeting to determine transactions and clients should support M's questioning. Leissner on the role of Mr. Low as an intermediary at the 1MDB. affidavit says.
After the agreement, in late April, a member of the committee sent an email to Mr. Leissner expressing concerns about Mr. Low's role, the affidavit adds. Mr. Leissner denied that Mr. Low was involved, according to the affidavit.
A few months later, in September 2013, Mr. Blankfein met Mr. Low for the second time. Mr. Leissner has arranged for Mr. Najib, then Prime Minister of Malaysia, to sit with about twenty high-level Goldman clients at the Mandarin Oriental Hotel in New York. Mr. Low attended with Mr. Najib, said people familiar with the issue.
In late 2014, Mr. Blankfein congratulated MM. Leissner and Vella for their efforts to organize business with Malaysia.
"Look at what Tim and Andrea did in Malaysia," he said at a meeting in New York on how to build businesses in growing markets. "We must do more of that."
Write to Tom Wright at [email protected] and Liz Hoffman at [email protected]
