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WASHINGTON: Goldman Sachs Group Inc to pay a record foreign bribery fine in the US and plead guilty for the first time for its role in looting Malaysia’s 1MDB investment fund.
A Goldman subsidiary in Malaysia has pleaded guilty to a single count for its role in a scheme to divert billions of dollars raised for economic development in Malaysia.
The parent company avoided conviction in a settlement known as a deferred prosecution agreement, according to court proceeding in Brooklyn, New York, on Thursday. That designation is a victory for Goldman Sachs, because a conviction could have risked losing some institutional clients who cannot work with financial firms with criminal records.
The bank will pay more than US $ 2.3 billion (RM9.5 billion) in the plea deal, said US prosecutor Alixandra Smith, the largest penalty in US history for a violation of the Foreign Corrupt Practices Act. In total, Goldman’s sanctions will exceed $ 5 billion globally.
From about 2009 to 2014, the bank’s Malaysia unit “knowingly and deliberately agreed to violate the Foreign Corrupt Practices Act by making corrupt promises and paying bribes to foreign officials to obtain and retain business for Goldman Sachs,” the adviser said. Bank General Karen Seymour told US District Judge Margo Brodie in a video hearing Thursday.
The agreement, which was expected, concludes one of the largest banking probes inherited by the Trump administration.
It holds Goldman Sachs accountable for its role in raising $ 6.5 billion for 1MDB, much of which, according to US authorities, was stolen by people related to the country’s former prime minister and diverted to artwork and high-end real estate, a superyacht and Hollywood movie “The Wolf of Wall Street.”
In July, Goldman Sachs agreed to a deal with Malaysia that included a $ 2.5 billion payment and an unusual provision that the bank would guarantee Malaysia would recover an additional $ 1.4 billion of 1MDB assets seized worldwide. Malaysia dropped the criminal charges against the bank as part of that settlement.
The case against the Wall Street firm centers on its fundraising work in 2012 and 2013 for the state fund formally known as 1Malaysia Development Bhd. Goldman’s investment banking group, led at the time by now CEO David Solomon, raised $ 600 million from the sale of bonds.
Much of the case centered on Jho Low (Low Taek Jho), a Malaysian financier whom prosecutors accused of orchestrating the robbery. Low, who has professed his innocence, remains at large. But the investigations also attracted several Goldman Sachs employees.
Former Goldman chairman of Southeast Asia, Tim Leissner, has pleaded guilty in the United States to conspiring to launder money. He told a judge that he bribed foreign officials to obtain bond deals and conspired with “several other Goldman Sachs employees” to conceal the theft, bribe payments and money laundering from others at the bank. He will be sentenced in January.
A subordinate of Leissner, Roger Ng, was charged with conspiring with Low to launder money. He has denied wrongdoing.
The US documents referred to other senior Goldman officials, though not by name. At least one senior Goldman executive met with Low after the bank’s compliance department raised flags over him, according to the US government.
Another executive, Leissner’s head of Asia at the time, was briefed on a plan to pay kickbacks and kickbacks to ensure that 1MDB’s fundraising proceeded, according to previous government documents. That executive matches the description of Andrea Vella, who has since left the bank. Vella agreed to a lifetime ban on banking by the Federal Reserve without admitting or denying the wrongdoing.
The 1MDB scandal sparked investigations in Asia, the United States and Europe. Authorities on three continents spent years tracking funds allegedly flowing from 1MDB to ornaments of wealth.
Goldman Sachs’ Asian unit was fined $ 350 million by Hong Kong’s financial regulator over the 1MDB affair, according to a statement the previous Thursday.
