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In the fall of 2009, the high social scene in New York was overflowing with discussions about a very Malaysian social financier known as Jho Low, who visited the most exclusive establishments in the city with a fleet of black SUV Cadillacs.
Almost no one knew more about the party animal or how he had raised enough money to spend hundreds of thousands of dollars in Manhattan's upscale bars. In November of this year, the New York Post published a scathing profile of Mr. Low describing him as a "mysterious man".
It is therefore surprising that, two weeks later, Lloyd Blankfein, one of the most powerful bankers in the world, then CEO of Goldman Sachs, attended a meeting with Low and then Prime Minister Najib Razak. from Malaysia.
Since then, US prosecutors have blamed Low for presiding over widespread fraud in the 1MDB national development fund, which involved bribing government officials to billions of dollars.
Much of this money has been found in Van Gogh's paintings and luxury properties in Beverly Hills, according to documents filed by the court. In a particular irony, it was also used to finance the the wolf of Wall Street movie, a warning about excesses in New York's financial district.
While the 1MDB scandal has gained momentum in recent years, Goldman has been questioned several times about his role in underwriting bonds worth $ 6.5 billion. for the Malaysian public fund in 2012 and 2013, a service for which he charged a heavy commission of 600 million dollars.
Goldman has always claimed not to know how the product of the bond offerings was spent, but his involvement in the scandal has again been highlighted in recent weeks after two of his former employees were charged with their role. alleged in the 1MDB case. . The bank did not respond to a request for comment on Thursday.
Earlier this week, Goldman's new CEO, David Solomon, said he was "very anxious" that Tim Leissner, a former partner who pleaded guilty, and Roger Ng, a former chief executive, had "broken the law." blatantly ". A third banker, the former co-head of Goldman's investment bank in Asia-Pacific (excluding Japan), is not accused of wrongdoing and has been put on leave.
Prosecutors allege that MM. Leissner and Ng conspired to commit the fraud with Low, who acted as a secret broker to spoil most of the transactions between 1MDB and Goldman. The three men were charged with money laundering last week and accused of violating US laws against bribing foreign officials.
Mr. Solomon's comments this week appear to be part of a carefully choreographed strategy to portray Goldman as a victim of the alleged criminality of Mr. Leissner and Mr. Ng, while the leaders expect that the department of Justice sanctions the bank for failing to identify or prevent harmful activities.
"If you read the indictment of Leissner, it is clear that there were two people in the bank and a person outside who were conspiring to conceal information at our base our compliance and business information, "said a Goldman executive.
"We did not know that there was an intermediary," said the executive. "If we had known, then we would not have done [the bond offering]. "
However, the revelation that Mr. Low would have met Mr. Blankfein at least once could undermine the story of this "rogue employee". Mr. Blankfein is still President of Goldman, having succeeded Mr. Solomon as CEO earlier this year.
It is unclear whether Mr. Blankfein knew that Mr. Low had helped to organize the 2009 meeting with the Malaysian Prime Minister or if the duo had even spoken. But the mere fact that they met could complicate the bank's attempts to prove that it did not know that it was involved as an intermediary in transactions with 1MDB.
Prosecutors believe that Low met with a senior Goldman official on a second occasion in 2013 at a rally attended by the Malaysian Prime Minister and one of his family members. The meeting was held at the Time Warner Center in New York, according to documents filed by the court.
A person informed of the matter stated that the unidentified executive officer at the 2013 meeting and detailed in the document was Mr. Blankfein, although there is some doubt as to the presence of Mr. Low at this second meeting .
In April 2010, Mr. Low sent an email to Mr. Ng, asking him to help him ensure the presence of a senior US politician at an event in New York, where the charitable work of wife of the Malaysian Prime Minister. According to the documents filed by the court, this request was conveyed to a "senior official" of Goldman, although the informed person in the case stated that it was not about Mr. Blankfein nor another senior officer.
Goldman believes that the indictments against Mr. Leissner, Mr. Ng and Mr. Low largely support the defense of his rogue employees. For example, the bank's compliance department repeatedly asked if Mr. Low was involved in any of the 1MDB contracts, and he has always denied that, prosecutors said.
That Goldman succeeds in demonstrating that he is a victim of a dishonest employee could play a significant role in any possible DoJ sanctions against the bank.
Banks tend to pay relatively small fines to settle scandals related to unscrupulous operators, even in Europe, where sanctions are generally less onerous than in the United States. UBS was fined $ 2.3 billion for 2011 by Kweku Adoboli for a "loss of control" and a fine of € 4 million in 2008 by Societe Generale for the Jerome Kerviel scandal.
"It's not that different from a dishonest trader who did not book the deal and simply slipped it into his drawer," said the Goldman executive.
However, while Mr. Leissner allegedly concealed Mr. Low's involvement in the compliance staff, he was less circumspect to the other employees of the bank. On two occasions, he attempted to help the Malaysian financier open a personal wealth management account at Goldman, although his efforts were unsuccessful due to concerns over the source of his money.
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The DoJ's accusations indicated that he thought the problems were more prevalent than a few bad apples, criticizing Goldman's "corporate culture." . . particularly in South-East Asia ". The bank "was very focused on reaching agreements, sometimes favoring this objective before the proper functioning of its compliance functions".
Goldman will be able to make his case to the DoJ at a meeting next week. "We will explain the lengths at which [Mr Leissner and Mr Ng] went [to deceive compliance], "Said a person familiar with the situation.
And the bank will also point out that the majority of the information contained in the indictment against the pair is evidence provided by Goldman.
However, after years in which Goldman has presented itself as the purified bank that has avoided many of the great scandals raging among its rivals, it could well lose its luster.
"It's very difficult to manage people in very remote places," said Goldman's executive. "And we are discovering it."
