Goldman Sachs is finally settling charges related to its role in Malaysian corruption scandal that has dogged the bank for years — and the resulting pain will spread to the C-Suite.
The megabank’s Malaysian unit said in a Thursday court hearing it will plead guilty to US Department of Justice charges that it violated the anti-bribery provisions of the Foreign Corrupt Practices Act for its role in creating the 1MDB fund for the Malaysian government that was used for a stunning litany of corrupt purposes.
As part of the agreement, Goldman will pay more than more than $2.3 billion and forfeit $606 million more. More regulators will also take a cut as Hong Kong’s Securities and Futures Commission announced early Thursday that it has fined Goldman $350 million.
Goldman will also enter into a deferred prosecution agreement on a separate but related charge. That deal will allow the bank to avoid criminal charges for 3 and a half years if it demonstrates good conduct during that time period.
Adding in the settlement Goldman reached earlier in 2020 with the Malaysian government, the bank will pay more than $5 billion for its Malaysian misadventure, a vast sum that is equal to almost a full year’s profit.
That number has also prompted Goldman to take some internal disciplinary measures.
Senior executives past and present will have tens of millions of dollars clawed back by the bank, including penalties for current chief David Solomon and his predecessor Llloyd Blankfein, who oversaw the bank during the 1MDB deal. Bonuses for this year are also reportedly in danger.
A Global Asset Management Seoul Korea Magazine