Jho Low, Goldman Sachs schemed on US$3.5bil guarantees for 1MDB, court told
Low took out a piece of paper and “started drawing boxes”. On one side of the page were several boxes for Malaysian officials who needed to be paid off, and on the other were boxes for the Abu Dhabi officials.
(FMT) – A US court has heard how fugitive businessman Low Taek Jho, or Jho Low, and Goldman Sachs executives planned to get an Abu Dhabi state-owned firm to guarantee 1MDB’s borrowings.
The revelation was made by former Goldman Sachs banker Tim Leissner, after it was established that the Malaysian government would not provide a second guarantee for 1MDB.
Leissner, 52, is the star witness in the trial of Roger Ng, former Goldman Sachs head of investment banking in Malaysia.
According to court documents sighted by FMT, Leissner was asked about a meeting he was involved in along with Ng, Low and Andrea Vella, one of Goldman Sachs most senior investment bankers in Asia at the time.
“It was really the start of our coming up with a structure on how to finance 1MDB in the international markets. Vella’s first question to Low was: Can the Malaysian government provide another guarantee for 1MDB?
“In the previous funding, which raised US$1.25 billion for 1MDB in the open market, there was a government guarantee. So Vella’s first question is: Can the Malaysian government provide another guarantee?”
Leissner said Low then said that to his understanding, another guarantee was not forthcoming.
“We have tried over the years and they said no every time, so don’t count on it.”
This led to Vella asking who else could provide a guarantee to 1MDB as it did not have the credit strength to raise billions of dollars.
Then, Leissner said, Low suggested Abu Dhabi sovereign wealth fund Aabar Investments PJS. However, Vella said Aabar, too, did not have the credit strength.
Vella then suggested Aabar’s parent company, International Petroleum Investment Co (IPIC), which had excellent credit ratings.
“So IPIC was for, in Andrea’s mind, the right entity to go to get a guarantee in Abu Dhabi, the parent of Aabar.
“Jho’s response was that he was going to check this. That he knew Sheikh Mansour, the chairman of IPIC, as well as Khadem al-Qubaisi, the CEO of IPIC.
“Since he had a relationship with these two gentlemen, he thought that he may be able to get that parent through IPIC.”
Leissner said the takeaway from the meeting was that they had thought of a “solution” in IPIC guaranteeing 1MDB’s borrowings.
IPIC would go on to guarantee two tranches of US$1.75 billion bonds issued by 1MDB. In return, 1MDB transferred some US$2.08 billion over two years plus a US$1.4 billion security deposit to a company registered in the British Virgin Islands called Aabar Investments PJS Ltd (Aabar BVI).
Subsequently, IPIC said that Aabar BVI “was not an entity” within IPIC’s corporate group and that it nor Aabar received any money from 1MDB. It would later be revealed that Aabar BVI was a company incorporated by Low.
‘Sheikh would not get out of bed for less than US$100 million’
According to Bloomberg, Leissner said Low told him Sheikh Mansour “would not get out of bed for less than US$100 million”. Sheikh Mansour has not been accused of wrongdoing by the US.
Leissner described a meeting he and Ng had with Low at Low’s home in the Mayfair section of London in 2012, not long before Goldman greenlighted work on 1MDB and raised US$1.75 billion for 1MDB.
At the meeting, he said, Low took out a piece of paper and “started drawing boxes”. On one side of the page were several boxes for Malaysian officials who needed to be paid off, and on the other were boxes for the Abu Dhabi officials.
Low said that at the top levels, payments to the Malaysia and Abu Dhabi sides of the criminal enterprise “had to be the same and be perceived to be the same,” Leissner testified.
“In my mind, that meant both sides had to get US$100 million,” Leissner testified, according to Bloomberg. “I can’t say I was surprised.” he said, adding that years of working in emerging markets had taught him that bribes and kickbacks were sometimes associated with projects involving government officials.
At the end of his presentation, Low said Leissner and Ng would also be “taken care of”, Leissner testified.
“I was, of course, happy that I was about to make some additional money,” he told the jurors. “I wanted to make more money, even though I was well paid at Goldman Sachs.”
He said that after the meeting, he and Ng walked back to Leissner’s hotel.
“As Roger and I walked, we agreed we would never say anything to anyone at Goldman Sachs or outside Goldman Sachs” about the payments “other than the participants that were there”.
“Bribes had to be paid to make it happen,” he said, “but we always kept it to the two of us.”