Sat, 05 Dec 2020

Goldman Sachs to Pay Record Fine Over 1MDB Scandal

Voice of America
23 Oct 2020, 10:05 GMT+10

A settlement has been reached over charges leveled against Goldman Sachs Group Inc. related to the global financial institution's conspiracy to violate foreign bribery laws in the United States.

The firm will pay $2.9 billion in the plea deal, the largest penalty of its kind in U.S. history, for its role in Malaysia's 1Malaysia Development Berhad fund corruption scandal, known as 1MDB.

In total, Goldman Sachs will pay more than $5 billion globally.

The Asian subsidiary of Goldman Sachs pleaded guilty after admitting Thursday the company "knowingly and willingly" conspired to violate the Foreign Corrupt Practices Act. Representatives of the firm admitted violating U.S. anti-bribery laws by engaging in bribery that resulted in the looting of billions of dollars from a fund designed to increase economic development in the country.

In a news release issued by the U.S. Department of Justice, Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation's Los Angeles field office, said "1MDB was established to drive strategic initiatives for the long-term economic development of Malaysia. Goldman Sachs admitted today that one billion dollars of the money earmarked to help the people of Malaysia was actually diverted and used to pay bribes to Malaysian and Abu Dhabi officials to obtain their business."

From 2009 to 2014, the firm's Malaysian unit raised $6.5 billion for 1MDB. According to U.S. authorities, the funds were stolen by people connected to former Prime Minister Najib Razak, who was removed from office in July and is currently serving a 12-year jail sentence for criminal breach of trust, money laundering and abuse of power related to the scandal.

Money raised by Goldman Sachs went toward financing the lavish lifestyles of Malaysian officials, who spent the funds on mega-yachts, a boutique hotel in Beverly Hills and a share of the Hollywood movie "The Wolf of Wall Street."

The Justice Department said the firm's involvement goes against the Foreign Corrupt Practices Act, which bans U.S. companies from paying foreign government officials for help in securing business ventures.

The bribery resulted in Goldman Sachs' role as an adviser on energy acquisitions and provided opportunities to secure a role in the highly anticipated and lucrative initial public offering for 1MDB's energy assets.

The settlement allows the firm to avoid facing criminal convictions.

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