Goldman Sachs Executives Will Have To Return Millions In Pay Over Bribery Scandal
Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over a bribery scandal in Malaysia.
Goldman has faced regulatory probes in the United States and
Malaysia over allegations that it enabled billions of dollars to be siphoned
off from a Malaysian development fund and over bribes paid to government
officials. The scandal that ensued led to the resignation of the Asian
country's prime minister.
Besides Solomon, the executives who will return part of
their bonuses include former CEO Lloyd Blankfein, who presided over the bank
when the scandal took place, as well as the former chief operating officer and
chief financial officer.
Altogether, the executives will have to forfeit or return
about $174 million, the bank said
U.S. officials also announced that the bank will pay a fine
of about $2.8 billion, in addition to $2.5 billion it must pay to the Malaysian
government. The blue-chip bank posted a quarterly profit of $3.6 billion in the
July-September period.
"This action is entirely appropriate under the
circumstances," Goldman Sachs's board said in a statement that announced
the action taken against executives while also addressing the regulatory
settlements. "The Board's announcement is an important reminder that we
are all responsible for each other's actions, including our collective
failures."
Goldman pleaded guilty to conspiracy in a Brooklyn federal
court on Thursday, acknowledging that its Malaysian subsidiary knowingly
violated the Foreign Corrupt Practices Act. Employees at Goldman's subsidiary
helped raise $6.5 billion for the 1MDB investment fund in 2012 and 2013.
Much of the money was later looted by Malaysian government
officials and their associates, with the assistance of the Goldman bankers,
Timothy Leissner, and Roger Ng, according to U.S. officials. Leissner has
pleaded guilty, while Ng maintains his innocence and will go to trial in March.
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Under the terms of the deal with the Justice Department,
Goldman will admit wrongdoing but will avoid prosecution.
The deal marks an acknowledgement by Goldman that it
fostered a culture where wrongdoing was tolerated and senior management
overlooked red flags.
"Goldman Sachs today accepted responsibility for its
role in a conspiracy to bribe high-ranking foreign officials to obtain
lucrative underwriting and other business relating to 1MDB," said Brian C.
Rabbit, acting assistant attorney general of the Justice Department's Criminal
Division.
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