This article first appeared in The Edge Malaysia Weekly on March 14, 2022 - March 20, 2022

A Goldman Sachs employee who oversaw anti-­money laundering (AML) at the bank said that his former colleague Roger Ng Chong Hwa did initially raise a red flag in 2010 over the bank’s prospective dealings with fugitive financier Low Taek Jho (Jho Low), but subsequently did not raise any concerns.

Prosecution witness Patrick Kidney, who oversaw AML programmes for Goldman from 2009 to 2011, also revealed that as early as 2010 — some two years before 1Malaysia

Development Bhd (1MDB) acquired power assets and issued US$3.5 billion in bonds to fund the purchase — the bank’s compliance department found Jho Low to be unreliable and a huge credit risk, given the number of red flags raised in its due diligence. Moreover, the bank could not verify the source of his enormous wealth.

Ng had referred to Jho Low as a potential Private Wealth Management (PWM) client — high-net-worth individuals who are interested in various banking services.

But at the onset, although he had made the referral to Goldman, Ng said that he did not know Jho Low well and “advised caution” in accepting Jho Low’s claims at “face value”, Kidney testified at Ng’s ongoing trial over the 1MDB scandal, according to court documents obtained by The Edge.

“Roger Ng advised caution in accepting the claims at face value. Roger accepted that some Malaysian families construct opaque structures to ensure discretion. He did not find the individual’s claims to be credible and recommended requiring very specific verification of all claims,” said Kidney, reading from a presentation in March 2010 for Goldman, adding that Ng conveyed that he had only met Jho Low once prior to this.

However, according to the prosecution, around April 2010, there was a change in Ng’s response — based on Kidney’s email correspondence.

Ng was participating in some of the calls with Jho Low for the latter’s onboarding process and even confirmed that Jho Low was instrumental in introducing Goldman in helping to establish a Malaysia sovereign wealth fund (then Terengganu Investment Authority, which subsequently became 1MDB).

Jho Low, he said, was also part of the meeting between then Malaysian prime minister Datuk Seri Najib Razak with former Goldman chairman Lloyd Blankfein in New York, in November 2009.

As the onboarding process continued in May 2010, Kidney testified that Ng had not at any point during the meetings recommended rejecting Jho Low as a client, which would have been a “vital piece of information” to take into consideration. By June, Jho Low was ultimately not taken in as a PWM client. Kidney said that there was an article which indicated there was a call for an investigation into his corrupt practices. He did not elaborate further.

Kidney worked on Jho Low’s case for about six months, from January to June in 2010. Part of his role was to conduct Know Your Customer (KYC) on potential Goldman clients, which is basically screening and due diligence — as per regulatory requirements — before a client is taken on board.

He oversaw Jho Low as a potential PWM client around early 2010 as it was brought to his attention through colleagues in Switzerland and London that there were issues of concern.

But, “surprisingly”, Jho Low was put forth again as a client around March 2011, this time through Singapore. When the matter came up, Kidney in one correspondence wrote: “To be clear, we have pretty much zero appetite for a relationship with this individual (Jho Low).” Questioned by prosecutor Dylan Stern, Kidney relayed that Jho Low’s application was pending for about two or three months, which he admitted was “exceptionally long” as the typical review process required only a few weeks.

There were a “host of red flags” when it came to Jho Low, Kidney said, primarily revolving around how he made his enormous fortune and his links to government officials and dealings involving state entities. The bank deemed these ties could be a risk with the Foreign Corrupt Practices Act (FCPA) for, among others, the risk of corruption.

“I can’t think of very many that have ever come up with this amount of red flags,” said Kidney.

Kidney, who was also cross-examined on March 10, confirmed an email correspondence that indicated that Tim Leissner had put in the second referral for Jho Low in 2011.

Defence attorney Marc Agnifilo also referred to Ng’s caution that Jho Low’s statement could not be accepted at “face value” and that Jho Low’s claims were “not credible”, and put it to Kidney that they were not endorsements. Kidney agreed that they were not. Kidney also agreed with Agnifilo when asked if Ng had conveyed his “personal belief” about Jho Low to Goldman.

Agnifilo also highlighted that Ng, in voicing out his initial concern, was the only one on the list of “negative feedback from sources”, which Kidney affirmed.

Agnifilo also highlighted that Ng was not informed of any of the research that Kidney was doing regarding Jho Low’s file, to which the latter said it was not his responsibility to rope in Ng as he was not dealing with Ng in this matter.

Recalling some of the phone calls during the meeting, Agnifilo highlighted that even in April, Ng still “recommended going through due diligence”, to which Kidney replied “that was fair to say”.

Ng’s trial is ongoing in the US District Court, Eastern District of New York.

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