The revelation was made by former Goldman Sachs banker Tim Leissner, after it was established that the Malaysian government would not provide a second guarantee for 1MDB.
Leissner, 52, is the star witness in the trial of Roger Ng, former Goldman Sachs head of investment banking in Malaysia.
According to court documents sighted by FMT, Leissner was asked about a meeting he was involved in along with Ng, Low and Andrea Vella, one of Goldman Sachs most senior investment bankers in Asia at the time.
“It was really the start of our coming up with a structure on how to finance 1MDB in the international markets. Vella’s first question to Low was: Can the Malaysian government provide another guarantee for 1MDB?
“In the previous funding, which raised US$1.25 billion for 1MDB in the open market, there was a government guarantee. So Vella’s first question is: Can the Malaysian government provide another guarantee?”
Leissner said Low then said that to his understanding, another guarantee was not forthcoming.
“We have tried over the years and they said no every time, so don’t count on it.”
This led to Vella asking who else could provide a guarantee to 1MDB as it did not have the credit strength to raise billions of dollars.
Then, Leissner said, Low suggested Abu Dhabi sovereign wealth fund Aabar Investments PJS. However, Vella said Aabar, too, did not have the credit strength.
Vella then suggested Aabar’s parent company, International Petroleum Investment Co (IPIC), which had excellent credit ratings.
“So IPIC was for, in Andrea’s mind, the right entity to go to get a guarantee in Abu Dhabi, the parent of Aabar.
“Jho’s response was that he was going to check this. That he knew Sheikh Mansour, the chairman of IPIC, as well as Khadem al-Qubaisi, the CEO of IPIC.
“Since he had a relationship with these two gentlemen, he thought that he may be able to get that parent through IPIC.”
Leissner said the takeaway from the meeting was that they had thought of a “solution” in IPIC guaranteeing 1MDB’s borrowings.
IPIC would go on to guarantee two tranches of US$1.75 billion bonds issued by 1MDB. In return, 1MDB transferred some US$2.08 billion over two years plus a US$1.4 billion security deposit to a company registered in the British Virgin Islands called Aabar Investments PJS Ltd (Aabar BVI).
Subsequently, IPIC said that Aabar BVI “was not an entity” within IPIC’s corporate group and that it nor Aabar received any money from 1MDB. It would later be revealed that Aabar BVI was a company incorporated by Low.