Former Goldman Sachs Group Inc. banker Roger Ng recommended Malaysian financier Jho Low as a private client in late 2009, but advised caution, a former compliance officer told a jury.
Patrick Kidney, a prosecution witness in Ng’s bribery trial, said Ng advised Goldman’s compliance department not to accept Low’s claims about the size and source of his wealth “at face value.”
A compliance panel spent six months trying to vet Low and in the end rejected him as a client in June 2010 after internal “red flag” reports were issued.
Prosecutors may have called Kidney to show that Ng continued to do business with Low for years after Goldman rejected him, despite the concerns he’d raised. Ng told Kidney’s team that he only met Low once by late 2009, but it’s not clear whether that’s true. The government has produced emails showing that Ng met with Low in New York City on Oct. 31, 2009 and again the next day.
Ng, 49, is accused of conspiring with his former boss Tim Leissner to help Low siphon billions of dollars from the Malaysian sovereign wealth fund — 1MDB. Prosecutors say Low, the scheme’s mastermind, bribed officials in Malaysia and Abu Dhabi and paid kickbacks to the bankers. He was charged with Ng and remains a fugitive.
Ng’s lawyer Marc Agnifilo pointed out no other Goldman banker who knew Low raised concerns about him.
“There are no other sources giving negative feedback?” he asked Kidney.
“That’s correct,” Kidney said.
Under questioning by Agnifilo, Kidney also said no one on his team informed Ng of their decision to reject Low.
During questioning by prosecutor Dylan Stern, Kidney said Goldman compliance officers met with Low several times between January and June 2010. Low couldn’t explain the source of his wealth and submitted letters of recommendation that couldn’t be verified and “appeared to be written by the same person,” Kidney said.
Kidney described for jurors one of the “red flags” reports in which Ng provided “negative feedback” about the financier.
“He did not find the individual’s claims to be credible,” Kidney read a March 2010 draft summary on Low that quoted Ng. He said Ng told Goldman that, “he had not heard of the individual apart from meeting with him on a single occasion” when he was also introduced to then-Malaysian Prime Minister Najib Razak.
Kidney’s team found multiple problems with Low as a private client, including his relationships with “Politically Exposed Persons” or people who posed a foreign corruption threat, he said. Each time the compliance team asked Low for information explaining the source of his wealth, the Malaysian financier offered data that sent them “going in circles,” he said.
“Every time we tried to unpick it, we ended up in a dead end,” he said.
By June 2010, Kidney said his team decided to reject Low, even though he said colleagues complained that Rothschild & Co had accepted Low’s father as a private wealth client. Kidney said the last straw came after bankers were sent a news article about Low’s allegedly corrupt activities.
“There were so many unresolved issues, so many red flags, so many issues of alleged corruption,” he said. “There was no way I could ever say that individual being on boarded” at the bank.
Nevertheless, Kidney said Leissner again proposed Low as a Goldman private client in 2011. Kidney was asked his reaction.
“Surprised? Yes,” he said. “I had not expected it. As far as I was concerned it was an open and shut case. To me it was not to be considered for a client relationship.”
When Leissner testified last month, he claimed that it was Ng who proposed Low a second time in 2011 but said he “supported” it.
The trial resumes on Monday.
The case is U.S. v. Low Taek Jho, 18-cr-538, U.S. District Court, Eastern District of New York (Brooklyn).