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Goldman Sachs bankers who worked on a series of lucrative bond deals at the center of the 1MDB scandal achieved “hero status” at the bank, according to testimony from a former partner who has pleaded guilty in connection with the case.
Tim Leissner estimated Goldman made close to $ 700mn from the 1MDB bond deals – about $ 100mn more than the figure previously given by prosecutors. The sum was “unprecedented” and “celebrated by Goldman Sachs as such”, he told the jury in Brooklyn federal court on Wednesday, as he focused on the bank’s culture to explain his actions.
The bankers who worked on the 1MDB bond deals received “hero status” within the bank, Leissner said, and their work was “highlighted at the highest level of Goldman Sachs many times”. Goldman declined to comment.
The testimony from Leissner, who has pleaded guilty to charges of conspiring to launder money and violate foreign bribery laws in connection with the 1MDB fraud, comes during the first week of the trial of former Goldman banker Roger Ng.
Ng has been charged by US authorities with conspiring to bribe officials and launder billions of dollars from the Malaysian state investment fund. He has pleaded not guilty.
Leissner was deemed a star banker at Goldman and rose swiftly through its ranks, joining the elite group of partners in 2006 and becoming chair of south-east Asia following the 1MDB transactions.
Leissner, who at one point was Ng’s former boss, described Ng as a “best friend” and worked with him on the 1MDB deals. Leissner struck a co-operation agreement with the US government in the hope of receiving a more lenient sentence.
“My greed and ambition took over,” Leissner said, about his role in a scheme the Department of Justice says defrauded 1MDB of $ 4.5bn. “I regret this deeply today.”
Marc Agnifilo, Ng’s lawyer, in his opening statement earlier this week said that in making Leissner its star witness, the government was “giving. . . a pass ”to a“ flat-out immoral ”individual who ultimately ended up working for Jho Low, the Malaysian financier accused of masterminding the 1MDB fraud. Low remains at large and maintains his innocence.
Leissner described a high-pressure environment at Goldman where bankers who missed out on business would be required to formally explain to management why. It was “ingrained in us it was unacceptable to lose business”, he said.
It “seemed important” to build a relationship with someone like Low, who appeared to have connections to the Malaysian government and entities in the Middle East that could further business for the bank, Leissner added.
Leissner said he joined a meeting in London in 2012 with Ng, Low and others in which the Malaysian financier listed individuals – including government officials in Malaysia and Abu Dhabi – who had to be “taken care of” with bribes for the 1MDB bonds to go ahead.
Low told Ng and Leissner they would also be compensated, Leissner marked. The former partner said that while he was enticed by the monetary reward, he was “solely” focused on getting the deals done. “I wanted to be a hero at Goldman Sachs,” Leissner said.
Leissner said Low’s decision-making power at 1MDB was concealed from Goldman for fear the deals would be struck down.
Leissner said he and his family received between $ 50mn and $ 60mn in misappropriated 1MDB funds, $ 44mn of which he forfeited to the US as part of his co-operation agreement. Leissner also said he transferred $ 35mn in 1MDB funds to Ng from a shell company he controlled, at Low’s behest.
Agnifilo earlier this week said Ng and Leissner were “not partners in crime”, and that Ng had “nothing to do” with the payment.
Goldman has said it was lied to by “certain members of the former Malaysian government and 1MDB”. It paid a record $ 2.9bn in a global settlement in 2020. Its Malaysian subsidiary pleaded guilty to a bribery charge. The bank also struck a settlement of up to $ 3.9bn with Malaysia over losses the south-east Asian country suffered from the scandal.
The three 1MDB bond offerings that Goldman worked on raised roughly $ 6.5bn. Of that, the DoJ alleges more than $ 2.7bn was misappropriated by Low, Ng and others.
The prime first witness at Ng’s trial, Andy Tai – a managing director at Goldman who worked with Leissner and Ng on the 1MDB bond deals – described Leissner as the more “insistent” of the pair in terms of tone. . .[and in] talking to people ”.
Ng and Leissner appeared on guest lists for extravagant celebrity-studded parties thrown by Low, according to testimony from Alex Cohen, chief financial officer at Strategic Group, which arranged lavish events for the Malaysian financier.
Guest lists for these events included celebrities Pharrell Williams, Kim Kardashian and Leonardo DiCaprio, although Cohen could not confirm if people on guest lists ultimately attended the parties, some of which cost more than $ 3mn.
The trial, which was delayed due to the Covid-19 pandemic, has renewed attention on a global, intercontinental scandal, with American officials labeling it “kleptocracy at its worst”. If convicted, Ng faces up to 30 years in prison. Leissner, 52, faces up to 25 years in prison when he is sentenced.
Additional reporting by Joshua Franklin in New York
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