BRIBERY: Goldman Sachs Charged and Agrees to Pay over $2.9 Billion
Posted on 10/22/2020
The Goldman Sachs Group Inc. and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over US$ 1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately US$ 6.5 billion in three bond deals for 1Malaysia Development Berhad (1MDB), for which the bank earned hundreds of millions in fees. Goldman Sachs will pay more than US$ 2.921 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere. Goldman Sachs accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB. Over a period of five years, Goldman Sachs participated in a sweeping international corruption scheme, conspiring to avail itself of more than $1.6 billion in bribes to multiple high-level government officials across several countries so that the company could reap hundreds of millions of dollars in fees, all to the detriment of the people of Malaysia.
Foreign bribery has been expensive for Goldman Sachs.
As of June 30, 2020, Goldman Sachs has US$ 132,599,000,000 in cash and cash equivalents. In total, these fines amount to 3.8% of Goldman Sachs’ cash and cash equivalent line item.
TOTAL COST
Goldman Sachs will pay total penalties, after crediting, of approximately US$ 2.6 billion in connection with the settlements. A separate obligation to pay US$ 606 million in disgorgement has been credited and satisfied as a result of the firm’s earlier settlement with the Government of Malaysia, in which the firm paid a total of US$ 2.5 billion, in addition to providing a $1.4 billion asset recovery guarantee. This brings the total payments in connection with governmental and regulatory settlements relating to 1MDB to an aggregate of approximately US$ 5.1 billion.
In the press release, “Goldman Sachs entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Eastern District of New York charging the Company with conspiracy to violate the anti-bribery provisions of the FCPA. GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.
Previously, Tim Leissner, the former Southeast Asia Chairman and participating managing director of Goldman Sachs, pleaded guilty to conspiring to launder money and to violate the FCPA. Ng Chong Hwa, also known as “Roger Ng,” former managing director of Goldman and head of investment banking for GS Malaysia, has been charged with conspiring to launder money and to violate the FCPA. Ng was extradited from Malaysia to face these charges and is scheduled to stand trial in March 2021. The cases are assigned to U.S. District Judge Margo K. Brodie of the Eastern District of New York.”
1MDB was established to drive strategic initiatives for the long-term economic development of Malaysia.
Under the terms of the agreements, Goldman will pay a criminal penalty and disgorgement of over US$ 2.9 billion. Goldman also has reached separate parallel resolutions with foreign authorities in the United Kingdom, Singapore, Malaysia, and elsewhere, along with domestic authorities in the United States. The DOJ will credit over US$ 1.6 billion in payments with respect to those resolutions.
Last, the Federal Reserve announced that it has fined Goldman Sachs Group US$ 154 million for its role in the scandal involving 1MDB.