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SINGAPORE – Goldman Sachs Singapore will pay 122 million dollars (165 million Singapore dollars) to the Singapore government for its role in the 1Malaysia Development Berhad (1MDB) bond offerings corruption scandal.
The fine is believed to be the largest ever imposed here, far exceeding the $ 13.3 million charged to BSI Bank, whose Singapore unit closed in 2016 for its role in the scandal.
The fine is in addition to the nearly $ 3 billion that parent Goldman Sachs agreed to pay after its Malaysian unit said it will plead guilty to violating overseas bribery laws, drawing a line under a saga that has persecuted the investment banking giant for years.
The Singapore Department of Commercial Affairs (CAD) has also provided Goldman Sachs Singapore with a 36-month conditional warning, in lieu of prosecution, for three counts of corruption offenses punishable under Section 5 (b) (i) of the Corruption Prevention Act, Chapter 241.
Meanwhile, the Monetary Authority of Singapore (MAS) directed the Goldman Sachs unit in Singapore to designate an independent external party to carry out a review of its corrective measures, said in a joint statement with the Attorney General’s Office and CAD the early Friday morning. (October 23).
MAS, in a separate statement, said it has issued a lifetime ban against Kevin Michael Swampillai, the former head of wealth management services at the Singapore branch of BSI Bank.
The lifetime ban (PO) orders were issued at the conclusion of an investigation by the MAS and came into effect on October 22, he said.
In its statement, MAS said that from 2012 to 2013, Swampillai and his then subordinate, Yeo Jiawei, had helped 1MDB restructure several of its joint venture interests. In that time, they funneled about $ 5 million as part of their fund management fees – “secret earnings” – to an entity owned by Mr. Swampillai. This was done without the knowledge and authorization of BSI Bank.
MAS said Swampillai also deliberately made false statements to 1MDB auditors in an attempt to “improperly influence” them. He misrepresented that the assets held by PetroSaudi Oil Services, one of 1MDB’s investments, were liquid in nature and mostly cash, even though he knew the assets comprised two drillships.
The 1MDB scandal dates back to the government of former Malaysian Prime Minister Najib Razak, which created the 1MDB fund in 2009. According to US prosecutors, Goldman paid more than $ 1.6 billion in bribes to foreign officials in Malaysia and Abu Dhabi between 2002 and 2014. to win 1MDB business.
Singapore’s case against Goldman stems from the CAD investigation of former Goldman Singapore CEOs Tim Leissner and Roger Ng into three bond offerings underwritten by Goldman Sachs International for 1MDB subsidiaries.
In August 2018, Leissner pleaded guilty in a U.S. District Court to one count of conspiracy to violate the Foreign Corrupt Practices Act and one count of conspiracy to commit money laundering. Following his guilty plea, MAS in December 2018 increased the 10-year purchase order against him to a lifetime ban.
In total, Goldman’s penalties will exceed $ 5 billion globally, which is roughly two-thirds of a year’s earnings.
Goldman will pay a $ 2.3 billion fine to the US Department of Justice and other regulators, and another $ 600 million in restitution for ill-gotten gains to resolve the US investigation and avoid a criminal conviction.
This is in addition to the $ 3.9 billion that Goldman agreed to pay Malaysia in exchange for dropping all criminal charges against the bank. Hong Kong also fined Goldman’s Asian unit on Thursday $ 350 million.
In an Oct. 22 memo to all bank employees globally, Goldman Sachs Chairman and CEO David Solomon said; “As you have all seen, the US Department of Justice, along with regulators in the US, UK, Singapore and Hong Kong, announced agreements with Goldman Sachs that resolve government and regulatory investigations into the 1MDB matter.”
“This has been a long process and we are pleased to put these issues behind us. But we are not leaving behind the lessons learned from this experience,” he said.
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