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Goldman Sachs agrees to pay USD 2.9 billion over 1MDB scandal

Goldman Sachs agrees to pay USD 2.9 billion over 1MDB scandal
Goldman Sachs agrees to pay USD 2.9 billion over 1MDB scandal

Goldman Sachs Group Inc., one of the world’s leading investment bank, has reportedly agreed to pay $2.9 billion to settle an investigation into its role in Malaysia’s 1MDB corruption scandal, concluding a long-standing saga that has dogged the investment bank for years.

Sources cite that the investment bank’s Malaysia division has also agreed to plead guilty to breaching foreign bribery laws related to the alleged looting of the nation’s sovereign wealth fund, 1MDB. The settlement, which covers penalties, disgorgement, criminal fines, was part of a coordinated deal between the investment bank and the US DOJ (Department of Justice) along with regulators in the United States, the United Kingdom, Hong Kong, and Singapore.

The US DOJ estimated USD 4.5 billion was misappropriated by top-level fund officials and their associates from the state-owned fund. The investment bank has inked a deferred prosecution deal with the agency and is not subject to a criminal conviction.

As per DOJ, the investment bank underwrote and arranged bond sales for the fund worth USD 6.5 billion and earned USD 600 million in fees for helping raise the cash. The fraud was alleged to have involved Malaysia’s Najib Razak, former prime minister, Jho Low, the Malaysian financier, and his associates.

These funds were allegedly used to purchase items ranging from yachts to artwork to produce several Hollywood movies including The Wolf of Wall Street. In July, the investment bank inked an agreement to pay USD 3.9 billion to Malaysia over its alleged role in the corruption scandal.

The DOJ said in the statement that as the investment bank admitted, senior Goldman bankers played a major role in this scandal, collaborating with others to siphon more than USD 2.7 billion from 1MDB. They used these funds to fill their own pockets and to pay USD 1.6 billion in bribes. In addition to the participation of numerous Goldman executives, other officers at the investment bank allowed this scandal to proceed by overlooking or ignoring clear red flags.

Source credit - https://www.theguardian.com/business/2020/oct/22/goldman-sachs-reaches-29bn-deal-to-settle-us-led-1mdb-inquiry

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Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.