The fallout over Goldman Sachs’ involvement in the vast 1MDB fraud deepened on Thursday, after the bank said its former chief executive met with the man at the heart of the scandal on a second occasion.
Lloyd Blankfein, now chairman of Goldman, met with Jho Low in December 2012 at the bank's New York headquarters during a meeting with the chief executive of Aabar, an Abu Dhabi investment fund, according to a spokesperson for the bank.
“Mr Blankfein had an introductory, high-level meeting in December 2012 with the CEO of Aabar, which was an existing client of the firm,” the spokesperson said.
They added: "At Aabar's request, Mr Low accompanied the CEO to that meeting."
Money laundering
The revelation that the bank’s most powerful executive met with Mr Low on at least two occasions could hamper the bank’s efforts to distance itself from the Malaysian financier, who has been charged by US prosecutors of masterminding the $2.7 billion (€2.4 billion) money laundering and bribery scandal.
The meeting at Goldman's Manhattan offices in 2012 was first reported by the New York Times.
Mr Blankfein also met Mr Low in 2009 at a gathering that included Najib Razak, who was then Malaysia's prime minister.
Prosecutors believe that Mr Blankfein and Mr Low met on a third occasion in 2013 at the Time Warner Center in New York, although people close to the bank dispute that Mr Low was actually there.
The Goldman spokesperson said it would be wrong to characterise the meeting with Mr Low as “one-on-one”, adding: “Mr Blankfein does not recall any one-on-one meeting with Mr Low, nor have we seen any record to suggest such a meeting occurred.”
Goldman Sachs acted as the sole bookrunner on $6.5 billion of bond offerings by 1MDB, Malaysia’s state development fund, in 2012 and 2013 and earned about $600 million from the deals - an unusually high amount.
Bribes
A large chunk of the bond proceeds was siphoned off to pay bribes to Malaysian officials, who spent the cash on Van Gogh paintings, Beverly Hills mansions, and to help fund The Wolf of Wall Street movie, according to US prosecutors.
Tim Leissner, a former Goldman partner, has pleaded guilty to federal charges that he participated in the fraud, but the bank has cast him as a rogue employee who went to great lengths to deceive its compliance department.
However, the drip feed of revelations over Mr Blankfein’s meetings with Mr Low has complicated the bank’s attempt to deal with the worst crisis to hit Goldman since the financial crash.
Shares in Goldman have fallen almost 14 per cent in the past month, as investors fretted about the reputational and financial fallout for the bank.
‘Massive global conspiracy’
On Wednesday, it emerged that an Abu Dhabi sovereign wealth fund is suing Goldman Sachs over the scandal, accusing the US bank of bribing its officials during a “massive global conspiracy”.
The International Petroleum Investment Company, a former partner of the 1MDB fund, filed a lawsuit in New York on Wednesday seeking unspecified punitive damages from Goldman and individuals, including Mr Leissner. – Copyright The Financial Times Limited 2018
