Goldman Sachs agreed that the bank has a role in Malaysia’s 1MDB corruption scandal. The scandal was regarding the bank, helping the Malaysian state fund to raise cash. Lastly, the settlement between the United States Department of Justice and the bank was made by paying. The bank has agreed to pay $3 billion because of the $174 Mn executive compensation it was holding back and the scandal.
Details of the settlement
According to the reports, the entire $2.9 billion settlement was divided into two parts. First, the $2.3 billion was for breaking the anti-bribery laws while the remaining $600 million was for the gains that it managed to get illegally. The bank also agreed that its Malaysia subsidiary pleads guilty in the US court.
After the complete information about the scandal was out, we came to know that Goldman officials have paid over $1.6 Bn in bribes to Malaysia’s foreign officials. This was to get hold of the 1MDB business. The justice department also reported that Goldmans bankers also helped the official to steal huge amounts of money from the fund to pay for Real-estate and luxury items.
Talking about how the bank hasn’t effectively addressed the situation Solomon wrote: “While many good people worked on these transactions and tried to do the right thing, we recognize that we did not adequately address red flags and scrutinize the representations of certain members of the deal team”.
Steps need to be taken the bank.
Odeon Capital analyst Dick Bove said, “Every person that participated in the decisions to proceed with these offerings needs their bonuses recaptured by the company. It is very positive to hear that Goldman may actually do this”. Solomon also needs to work faster to restructure the bank into a more traditional form. And also be less dependent on volatile trading venues.
Apart from the $2.9 billion paid by the bank in the US it has to pay fine in Malaysia too. To settle the case, Goldman paid $3.9 Billion in Malaysia to close the matter. The total amount paid is much more than the amount it kept aside in 2019 for legal matters.
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