A GOLDMAN Sachs Group Inc. senior legal executive who helped vet the 1MDB bond deals that exploded in scandal told a jury he warned Goldman bankers not to do business with Malaysian financier Jho Low.
Stephen O’Flaherty, who served in British intelligence for 30 years before joining Goldman, told the jurors in the foreign-bribery trial of former Goldman banker Roger Ng (picture) on Tuesday that despite his concerns about Low, none of the 1MDB deal bankers – including Tim Leissner, the head banker on the deal – disclosed Low’s involvement. He said that after his team conducted a due diligence review of Low, the bank rejected him as a private wealth client because of his questionable finances.
“We would not be comfortable working with Jho Low,” O’Flaherty testified in federal court in Brooklyn, New York. “We would not have Jho Low as a client of the firm, but if Jho Low was a small part of a deal, it would be difficult to say to the client he could not be part of it.”
O’Flaherty, co-head of Goldman’s Business Intelligence Group, testified as a prosecution witness against Ng, the only Goldman banker to go on trial over the epic looting of sovereign wealth fund 1Malaysia Development Bhd., or 1MDB. Ng is charged with conspiring with Leissner and Low, now a fugitive, in the massive fraud. Leissner, his former boss, pleaded guilty and is cooperating with the government.
Ng’s lawyers have assailed Leissner’s credibility, arguing that it was Leissner who misled Goldman superiors about Low’s role. Under questioning by Ng’s lawyer Marc Agnifilo on Tuesday, O’Flaherty said he had discussed his concerns about Low with Leissner but that he never met or spoke with Ng.
Federal prosecutors say Leissner and Ng concealed from Goldman superiors Low’s role in the scheme and helped the financier pocket at least $1.42 billion of $6.5 billion in three bond deals and pay tens of millions of dollars in bribes to Malaysian and Abu Dhabi officials. Low also paid millions of dollars in kickbacks to Leissner and Ng, according to the U.S. In addition, the government argues, Ng recommended that Goldman take Low on as a private client despite knowing about his finances.
The U.S. in 2019 struck a deal with Low to recover almost $1 billion of the funds stolen from 1MDB.
O’Flaherty testified that Low came to his attention after Ng’s recommendation and that he later learned that Goldman bankers were also considering doing a deal with Low that was later scuttled. He said when Ng recommended Low as a client, the banker claimed he had met Low only once before, though records show they had at least two previous meetings in late 2009.
O’Flaherty told the jury that just before the first 1MDB bond deal was reviewed by a firm-wide committee in April 2012, he asked whether Low was involved. He said he had heard from a Goldman banker in the Middle East that Low attended a meeting Leissner had in Abu Dhabi with Sheikh Mansour bin Zayed al Nahyan, the chairman of Abu Dhabi’s sovereign wealth fund International Petroleum Investment Co. An IPIC subsidiary guaranteed the 1MDB deal.
Leissner denied Low’s involvement, he said.
“He seemed to be irritated with me,” O’Flaherty testified. “Leissner was saying Low was not present.”
O’Flaherty told the court he later warned investment bankers that “it’s important that we have no role on our side for Low, and asked that any payment to intermediaries are declared. I was trying to get reassurance that Low was not involved.”
He was asked by the U.S. whether any of the Goldman bankers involved in the 1MDB deals disclosed that Low attended the meeting in Abu Dhabi or his involvement in 1MDB.
“Absolutely not,” he said.
The case is U.S. v. Low Taek Jho, 18-cr-538, U.S. District Court, Eastern District of New York (Brooklyn).