WASHINGTON (Reuters) – Goldum Sachs Group Inc. said on Thursday it was withdrawing 17 4,174 million in executive compensation and agreed to pay 2. 2.9 billion for its role in Malaysia’s 1MDB corruption scandal, which has plagued the bank for years. .
U.S. Department of Justice and other U.S. And the settlement with foreign regulators addresses the investigation into the role Goldman Sachs played in helping bankers steal cash, which Goldman helped raise from Malaysian state coffers.
While the scandal has proved to be a polite and costly saga for the giant Wall Street company, the long-awaited settlement should allow chief executive David Solomon to speed up his plans to turn the bank around after a decade of under-performance, analysts said. Goldm’s stock rose 1.4% on the news.
“Getting the back of management and the company in general is a big win,” said Marty Mosby, an analyst at boutique brokerage Winning Sparks.
Under the terms of the deal, Goldman agreed to pay fines for violating anti-bribery laws and deferring delayed legal proceedings that resulted in a ૦૦ 500 million loss, which also needs to improve its compliance controls.
U.S. on Thursday. The bank also agreed on Thursday to its Malaysian subsidiary in a federal court in a victory over lawyers who rarely take criminal convictions from corporate companies in U.S. federal court.
Brian Rabbitt, acting head of the Department of Justice’s Criminal Investigation Department, said fines for violating the Foreign Corruption Practices Act were the largest ever and demonstrated the bank’s “seriousness” in its role in a large-scale global conspiracy to plunder. 1MDB to billions of dollars ”.
The scam belongs to the government of former Malaysian Prime Minister Najib Razak, who set up the 1MDB fund in 2009.
Between 2009 and 2014, Goldman Sachs bankers bribed foreign officials with more than ઓને 1.6 billion to win a 1MDB business in Malaysia and Abu Dhabi, including વેચા 5.5 billion in underwriting in bond sales, for which it earned a ફી 600 million fee.
But, billions of funds were stolen by high-level fund officials and their associates to pay for real estate, art and other luxury items, with the help of Goldman Bankers.
In 2018, the Justice Department filed criminal charges against two Goldman Bankers, Tim Lesnar and Roger Ng. Lesnar pleaded guilty to the charges last year, while Ng’s case is pending in a New York court.
“While many good people worked on these transactions and tried to do the right thing, we recognize that we did not address the red flags adequately and examined the representations of some members of the deal team,” Solomon told staff in a memo on Thursday. Added, adding the bank has already made many compliance improvements.
He said the bank would seek compensation from the three bankers involved and its former executive team, “in recognition of the firm’s institutional failures.”
He and other senior executives also cut back on 2020, with total clawbacks and salaries cut to 17 174 million.
Thursday’s deal follows લર 93.9 billion paid in July to settle related fees in Malaysia.
Reserves, Deals
As of 2019, Goldman had set aside 4. 39.439 billion to cover legal and regulatory matters. Some of the 2 billion issues were for matters that had already been resolved with the Malaysian government. On Thursday, it said it would increase its provisions for lawsuits and regulatory proceedings by 250 250 million in the third quarter.
Dean Capital analyst Dick Bowe criticized Goldm’s management teams for approving the 1MDB bond deal and praised the board for the clubbacs. He said he expects fourth-quarter results to be a financial penalty, despite Goldman’s existing reserves.
“Everyone who has been involved in the decision to move forward with these fringes needs to get a bonus from the company again. It’s very positive to hear that Goldm can’t actually do this, “he added.
Despite the costs, analysts said Thursday’s deal should allow Solomon to reshape Goldm res as a more traditional bank and accelerate its plans to become less dependent on volatile trading sites. Some investors and analysts see the 1MDB probe as a barrier to making GoldMan transit deals, as U.S. The regulator will often ban banks from committing major misconduct while they are being investigated for serious misconduct.
With clarity on how much the bank needs to pay and a clean slate with regulators, Goldman will be able to become more aggressive on that front, Mosby said.
“When they didn’t get this opportunity over their heads, they paused. This is the green light to say they can go ahead and do it. “
Noor Zainab Hussain in Bengaluru, Sara N. in Washington. Reported by Lynch and Matt Suffff Hum in New York; Writing by Michelle Price and Anirban Sen; Edited by Bernard R., Cynthia Ter Sterman and Nick Ziminski
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