By Sarah N. Lynch, Noor Zainab Hussain
WASHINGTON: Goldman Sachs on Thursday agreed to pay nearly $3 billion to settle a probe into its role in Malaysia’s 1MDB corruption scandal, and its Malaysia unit pleaded guilty to violating foreign bribery laws, drawing a line under a saga that has dogged the bank for years.
Goldman has been investigated by regulators in at least 14 countries, including the United States, Malaysia, Singapore and others. British regulators fined Goldman 96.6 million pounds ($126 million) as part of global action.
According to the Justice Department, Goldman earned $600 million in fees for its work with 1MDB. Leissner, Ng and others received large bonuses in connection with that revenue.
“We recognize that we did not adequately address red flags and scrutinize the representations of certain members of the deal team,” Solomon wrote in a memo to staff on Thursday, adding the bank had already made several compliance improvements.
The Goldman group has entered into an agreement with the department deferring prosecution for three years provided the bank meets certain conditions, including beefing up its compliance measures, the agency said.
The guilty plea by the bank’s Malaysia subsidiary at a court hearing in Brooklyn was a major victory for prosecutors who rarely extract such concessions from corporate entities.
Since 2019, Goldman had set aside $4.39 billion to cover legal and regulatory matters. Some $2 billion was for matters it already resolved with the Malaysian government.
Goldman’s shares were up 1% on the news, as investors anticipated that Thursday’s deal should allow Solomon to accelerate his plan to reshape Goldman as a more conventional bank, less reliant on volatile trading venues, analysts said.
“Getting this overhang off the back of management and the company in general is a very big win,” said Marty Mosby, an analyst at boutique brokerage Vining Sparks.
The settlement may also boost the bank’s share price long term by removing pressure related to the probe, said Mosby. Goldman’s stock lags its rivals, trading at just 0.8 times the value of its assets.
Source: Reuters, Reporting by Noor Zainab Hussain in Bengaluru, Sarah N. Lynch in Washington and Matt Scuffham in New York; Writing by Michelle Price and Anirban Sen; Editing by Bernard Orr and Cynthia Osterman