Missed Payment
Ng, the only Goldman banker to go to trial in the 1MDB scandal, has argued he was the first to inform Goldman compliance about Low, sending “red flag warnings” not to do business with him. His legal team contends that Leissner, who pleaded guilty to money laundering and bribery of foreign officials, is testifying only to get a reduced sentence.

Leissner testified to several instances when everything almost fell apart, including a moment in which 1MDB neared a default when it missed its first interest payment on the Magnolia bonds. The lapse tripped alarm bells within Goldman, Leissner said, and risked triggering an investigation that would expose the whole scam.

For Goldman Sachs, a default by 1MDB would be “a reputational problem and money problem, because we had, of course, taken $200 million out” of the $1.75 billion. Personally, he said, he feared an investigation “would uncover, in fact, one of the reasons why there was no money left, which was the scheme.”

Leissner said the interest payment was finally made after the bankers reached out to Low, who said “not to worry, because he was making arrangements for the money to be there,” Leissner told the court.

While the late payment didn’t immediately affect Goldman’s banking business with 1MDB, it raised “red flags within our control function,” which requested “further due diligence to be conducted on 1MDB and its operations.”

Hiding Jho Low
Leissner testified that he and Ng concealed the extent of Low’s role in the deals from compliance, which was concerned with his source of wealth. A New York Post report circulating among Goldman bankers at the time described him as a “20-something Wharton grad from Malaysia who has burned through hundreds of thousands of dollars at the city’s hottest nightspots.”  

Leissner testified that he and Ng came up with code names for Low including Friend and PMO, for the Malaysian prime minister’s office, to which he had access. 

But Leissner said other Goldman officials knew about Low’s involvement. He cited his own boss at the time, Michael Evans, then Asia chairman, as well as several other former executives of the bank.

Leissner told the jurors Evans went with him to visit 1MDB executives after the Magnolia transaction and that Evans thanked the chief executive officer at the time for using Goldman.

“Don’t thank me,” Leissner said the CEO responded. “Thank Jho Low.” 

“So Mike knew from that moment,” Leissner told the jury, though he added that previously he had lied to Evans about Low’s involvement.

Tabloid Testimony
On Tuesday the trial turned tabloid for a while as Leissner told the jury that a woman with whom he had an affair blackmailed him into buying her a $10 million home by threatening to expose his crimes. That was the same day Leissner testified that in 2009 Malaysia’s prime minister, Najib Razak, suggested that in return for the 1MDB business he wanted his children to get jobs at the bank. 

“Just met PM’s three children with Jho at his apartment,” Leissner read to the jury from an email Ng sent him. “We’ll work on getting them to join GS.”

Leissner replied to Ng: “Sounds good my friend. Get them in.”

It didn’t work out—a senior Goldman official rejected the idea—so Leissner helped get one of the kids in the door at private equity firm TPG.