The compliance team at Goldman Sachs had no doubts about Jho Low: they wanted nothing to do with him.
In 2010, several years before the financier was allegedly at the centre of a multibillion-dollar plunder of a Malaysian state investment fund, Goldman’s compliance unit was wary about Mr Low’s dogged attempts to become a private wealth client of one of the most prestigious banks on Wall Street.
“I do not believe we will ever be able to get comfortable with this matter,” a senior Goldman compliance official noted in March of that year, referring to Mr Low’s attempts. He added that he would “like to shut this down once and for all” given information Goldman had that “so clearly states that we should exercise extreme caution”.
The revelation was one of many in documents released on Thursday by the US Department of Justice and New York’s Department of Financial Services, as Goldman agreed to a $2.9bn global settlement over its role in the looting of 1Malaysia Development Berhad, or 1MDB — a fund designed to accelerate the country’s economic development.
US authorities said that Goldman had played a “central role” in the scandal and ignored multiple red flags as it raised $6.5bn for 1MDB on the bond markets. The DoJ said that between 2009 and 2014, Goldman bankers and Mr Low paid bribes to officials in Malaysia and Abu Dhabi to ensure the bank won mandates for three 1MDB fundraisings between 2012 and 2013, deals that reaped unusually high fees of more than $600m.
In 2011, a managing director in Goldman’s compliance division noted to colleagues of Mr Low’s application to be a private wealth client that “we have pretty much zero appetite for a relationship with this individual (Mr Low) . . . This is a name to be avoided,” according to documents from the DoJ.
Despite the compliance department’s unease over taking Mr Low on as a client because of concerns over the origins of his wealth, investment bankers Tim Leissner and Roger Ng, who arranged the 1MDB bond sales, continued to press the case until at least 2013, the DOJ said.
The documents also point to the efforts made to conceal Mr Low’s involvement in 1MDB from others at the bank.
When a senior New York-based Goldman executive asked Mr Leissner about a “story circulating about an intermediary” on the 1MDB deals in 2013, he replied: “Not that I am aware of.”
The former Goldman partner, who has pleaded guilty to US charges of participating in the multibillion-dollar money laundering scheme, added: “There definitely was no intermediary on any of the trades. The blogs in Malaysia always try to link a young Chinese businessman [sic], Jho Low, to 1MDB.”
Nor did the efforts to keep the involvement of Mr Low under wraps stop there.
According to the documents from the DoJ, Goldman was involved in a number of other deals with the Malaysian financier, including a 2013 arrangement with a company connected to him that was not submitted to a compliance review at the until it was “substantially finalised”.
After being rejected because of concerns about the Low-related entity involved, it was resubmitted in the name of another entity, in which Mr Low was a “co-investor and active participant”, the DoJ said.
“Goldman deal team members knew this was merely a technical change in the deal structure, and knew but did not inform BIG (compliance) of Low’s continued involvement in the deal,” the DoJ said of a deal which earned the bank a “multi million dollar fee”. “BIG employees were later surprised to see press reports that the deal had been completed with Low’s involvement in late 2013,” the DoJ noted yesterday.
Separate filings by New York’s DFS claim that an internal memo about the 1MDB affair in October 2015 deliberately omitted a reference to a third party’s claim that Mr Low was the “leader of the pack” in the 1MDB scandal.
Mr Low is alleged to have used the 1MDB funds to embark on an extravagant spending spree, spanning art to the financing of the Oscar-nominated film The Wolf of Wall Street.
And the DoJ offered some indication of Mr Low’s lifestyle. The documents include new details of face-to-face encounters between Goldman’s employees and Mr Low, including a meeting on a yacht in the south of France “in or about 2013” attended by another senior Goldman executive and partner, as well as Mr Leissner and Mr Low.
In a bruising week for the bank, chief executive David Solomon admitted that Goldman “did not adequately address red flags and scrutinise the representations of certain members of the deal team.”
Meanwhile, Mr Low, who was indicted by US authorities last year, remains at large. He has denied any wrongdoing. His representatives did not respond to a request for comment.
Additional reporting by Stefania Palma in Singapore
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