Goldman Sachs to recap, cuts cost executives 1MDB fine

Goldman Sachs GS 0.68%

Group Inc. has seized tens of millions of dollars from top officials after a costly settlement to resolve several government investigations into its role in the Malaysian bribery scandal.

The Wall Street firm will recover money from chief executive David Solomon, his predecessor Lloyd Blankfin, and other current and former executives, people familiar with the matter said, as it prepares to follow the lapse in its dealings with a corrupt Malaysian investment fund Does, known as 1MDB.

Goldman said that Goldman has agreed to pay approximately $ 2.8 billion to the US Department of Justice and other global regulators to settle the 1MDB allegations. On top of the $ 2.5 billion agreed to pay to Malaysia’s government in July. The penalty amounted to a Wall Street firm for about eight months of profits.

In Brooklyn federal court on Thursday, a Goldman subsidiary in Malaysia said it would be guilty of conspiring to violate US anti-bribery laws. The bank hopes to finalize its settlement with the Department of Justice and regulators in the UK, Singapore and New York State on Thursday.

Financial moves — a combination of clawbacks for deceased executives and pay cuts for the present — are a concession for shareholders who will bear the financial costs of scams and employees, whose own bonuses are likely to shrink this year.

Lloyd Blankefin, former president and chief executive officer of Goldman Sachs.


Mark Kuzlerich / Bloomberg News

They also acknowledge that the brutality of the government’s lawsuit against Goldman was that it failed to properly oversee its senior bankers and promoted a win-by-cost culture, something more worthy of them. The exact amount at stake cannot be learned.

In 2012 and 2013, Goldman helped $ 6.5 billion for 1MDB by selling bonds to investors. Prosecutors say the majority of that money was stolen by an advisor to a fund named Joho Lo, assisted by two Goldman bankers and associates in the Malaysian and Emirati governments.

Goldman had long portrayed bankers — Timothy Leissner, who has pleaded guilty, and Roger Ng, who has maintained his innocence — as rogue employees who concealed their activities and Mr. Low’s in deals with their bosses Participation. Mr Low denied the allegations leveled against him.

With billions of dollars missing from Malaysia’s 1MDB becoming one of the biggest financial scandals ever, Goldman Sachs agreed to pay the US government more for its involvement after the 2008 crisis. Here’s how the alleged fraud happened and then fell apart. Photo Composite: Adam Falk

Write Liz Hoffman at [email protected]

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