Goldman Sachs Malaysia pleading guilty in 1MDB case in US, with US$2.9 billion settlement reached

Agreement resolves US probe into investment bank’s role in raising US$6.5 billion for Malaysian government

Goldman to demand repayment of US$174 million in salary and bonuses paid to current and former executives during corruption scandal

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A sign is displayed in the reception of Goldman Sachs in Sydney, Australia. Photo Reuters

Reutersin Washington

Published: 12:30am, 23 Oct 2020Updated: 10:08am, 23 Oct 2020

Goldman Sachs on Thursday agreed to pay nearly US$3 billion to settle a probe into its role in Malaysia’s 1MDB corruption scandal, and its Malaysia unit agreed to plead guilty to violating foreign bribery laws, drawing a line under a saga that has dogged the bank for years.

The settlement resolves a probe by US authorities into the bank’s role in underwriting three bond offerings in 2012 and 2013 that raised US$6.5 billion for Malaysia’s government.

Under the terms, Goldman has been slapped with a US$2.3 billion penalty and about US$600 million of disgorgement.

While the saga has proved a humbling and reputationally damaging episode for Wall Street’s powerhouse investment bank, Thursday’s settlement will allow CEO David Solomon to accelerate his plan to reshape Goldman as a more conventional bank, analysts said.

Goldman Sachs' Chairman and CEO David Solomon attends a session at the 50th World Economic Forum in Davos, Switzerland, in January. Photo: Reuters

In a court hearing, Goldman Sachs Malaysia said it would plead guilty to violating the Foreign Corrupt Practices Act in relation to the scandal.

The move follows a US$3.9 billion settlement the bank reached with Malaysia in July to settle all charges against the bank there related to the matter.