Goldman Sachs to pay $2-B to US authorities over Malaysia’s 1MDB scandal

South China Morning Post

Posted at Oct 20 2020 09:20 PM | Updated as of Oct 20 2020 10:42 PM

The Wall Street group is believed to have reached a deal with the US Department of Justice, which will mean it avoids criminal charges there

It finalised a settlement with Malaysia in July, and faces a penalty in Singapore for its role in raising funds for 1Malaysia Development Bhd

The ticker symbol and logo for Goldman Sachs is displayed on a screen on the floor at the New York Stock Exchange in New York, US. Brendan McDermid, Reuters file photo

Goldman Sachs has reached a long-awaited pact with the US Department of Justice to pay more than US$2 billion for the bank’s role in Malaysia’s 1MDB scandal, and the deal may be announced within days, according to people familiar with the matter.

The accord, part of an international action, will let the parent company avoid a US criminal conviction, according to the sources. The payment to the Justice Department is broadly in line with the bank’s prior reserves and analysts’ estimates.

The deal, expected to come just weeks before the US presidential election, would remove uncertainty for the bank following years of investigations and negotiations with the Justice Department over the firm’s fundraising for the 1MDB investment fund.

It follows an agreement in July to settle a related probe with Malaysia, in which the bank promised to pay US$2.5 billion. Malaysia dropped criminal charges against the New York-based company in early September.

A representative for Goldman Sachs declined to comment, and representatives for the Justice Department did not respond to messages seeking comment.

In all, Goldman Sachs may pay roughly US$5 billion once accords with Malaysia, the Justice Department and other agencies are tallied together.

In Singapore, authorities plan to levy a financial penalty and issue a warning with conditions, and if the company breaches them, Goldman Singapore could be prosecuted, people familiar the matter said.

The Monetary Authority of Singapore, Attorney-General’s Chambers and police did not immediately reply to an email seeking comment.

Investigations of the Wall Street firm focused on its work raising US$6.5 billion in 2012 and 2013 for the fund formally known as 1Malaysia Development Bhd, much of which was later allegedly siphoned off by people connected to the country’s former prime minister, Najib Razak.

Goldman’s investment banking group, led at the time by now-CEO David Solomon, collected US$600 million from the bond sales.

Authorities in Asia, the US and Europe have spent years tracing out the conspiracy and tracking down cash and assets around the globe, including properties, jewellery and art.

Goldman has long blamed rogue employees, asserting it had no idea the money it helped raise would be diverted from development projects.

One former Goldman Sachs partner, Tim Leissner, pleaded guilty in the US to conspiring to launder money and violating foreign bribery laws. Another executive was charged with foreign bribery offences.