More than 30 Goldman Sach execs, including CEO, reviewed 1MDB deals
KUALA LUMPUR: More than 30 Goldman Sachs executives, including its chief executive officer, David Solomon, and his predecessor, Lloyd Blankfein, reviewed 1Malaysia Development Bhd (1MDB) deals that led to the criminal charges against fugitive businessman Low Taek Jho and two of its former bankers.
A Financial Times (FT) report, quoting “people familiar with the approval process”, said the deals had been extensively scrutinised, since it involved not only the Malaysian sovereign wealth fund but also Abu Dhabi’s, which was teed up to buy some of the bonds.
“There were two sovereign wealth funds... –everybody had a look at this. You’re not going to find that what happened... was because there wasn’t an appropriate level of oversight,” FT quoted a banker, who reviewed the deal, as saying.
He said “everybody” included Blankfein and Solomon, who was head of Goldman’s investment banking division from 2006 to 2012, as well as Gary Cohn, then chief operating officer of the bank.
The report quoted a second person with knowledge of the deal’s approval process as confirming that more than 30 people at the bank reviewed it.
“There was no concern that the money was going to be stolen. The concern was that this is a new sovereign wealth fund, the concerns expressed were ‘do they understand (the fundraising)?’”
FT stated that Goldman Sachs received nearly US$600 million (RM2.497 billion) in fees from the deals, adding that rival bankers had said the hefty fees the fund was willing to pay for the fundraising should have raised red flags.
It quoted the second person with knowledge of the deal as saying that Goldman Sachs offered 1MDB a menu of fee structures and that the fund picked one that involved the United States bank taking the most risk onto its balance sheet.
“If the bond’s price had fallen, Goldman Sachs would have lost money,” the report stated.
The US Department of Justice had charged three people — Low, better known as Jho Low, and Goldman bankers Tim Leissner and Roger Ng — with financial offences.
Leissner pleaded guilty to the charges against him — two counts of conspiring to commit money laundering and bribing foreign officials.
Ng was arrested in Malaysia and is set to be extradited to the US, while Low is at large.