Bank was warned about Jho Low

NEW YORK: A Goldman Sachs Group Inc senior legal executive who helped vet the 1Malaysia Development Berhad (1MDB) bond deals that exploded in scandal has told a jury he warned Goldman bankers not to do business with fugitive 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 here 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 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.

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, 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 US$1.42bil (RM5.9bil) out of US$6.5bil (RM27bil) in three bond deals and pay tens of millions in bribes to Malaysian and Abu Dhabi officials. Low also paid millions of dollars in kickbacks to Leissner and Ng, according to the United States.

In addition, the government argued, Ng recommended that Goldman take Low on as a private client despite knowing about his finances. The US struck a deal with Low in 2019 to recover almost US$1bil (RM4.2bil) of the funds stolen from 1MDB.

O’Flaherty testified that Low came to his attention after Ng’s recommendation and he later learnt that Goldman bankers were also considering doing a deal with the Malaysian financier that was later scuttled.

He said when Ng recommended Low as a client, the banker claimed to have met him 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 had 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 (IPIC). An IPIC subsidiary guaranteed the 1MDB deal.

Leissner denied Low’s involvement, he said.

“He seemed to be irritated with me. Leissner was saying Low was not present,” O’Flaherty testified.

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 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. — Bloomberg