The central theses
- Goldman Sachs will pay $ 2.9 billion to resolve the investigation into its role in the 1MDB scandal.
- As part of the settlement, the current and former CEO of the bank had demanded part of their previous compensation.
The U.S. Department of Justice (DOJ) has been very busy lately. Today it announced that Goldman Sachs has agreed to pay more than $ 2.9 billion to regulators to investigate its role in the so-called 1MDB scandal between the government of Malaysia, a corrupt mutual fund (1MDB) and a Subsidiary bank to solve Goldman.
DiCaprio, Brando’s Oscar and The Wolf of Wall Street
In 2012 and 2013, Goldman helped raise $ 6.5 billion for 1MDB by selling bonds to investors. The DOJ says much of this money was stolen by an advisor to the fund named Jho Low, who was backed by two Goldman bankers and officials from the Malaysian and Emirati governments. Part of the money raised went towards financing The wolf on Wall Street, the Oscar-nominated blockbuster directed by Martin Scorsese and starring Leonardo DiCaprio (above) as Jordan Belfort, which grossed $ 392 million at the box office.
The film’s producer, Riza Aziz, the stepson of former Malaysian Prime Minister Najib Razak, has been accused of embezzling millions of dollars from the Malaysian government..He reportedly gave DiCaprio the Oscar trophy for best actor, which Marlon Brando won for At the water 1955 as a gift estimated at $ 600,000. DiCaprio was forced to return this gift as part of the investigation.
Goldman didn’t just have to write a check and move on. In an unusual move for this kind of settlement, Goldman had to admit wrongdoing. “Goldman Sachs today assumed responsibility for its role in a conspiracy to bribe senior foreign officials to obtain lucrative underwriting and other 1MDB-related business,” said Assistant Attorney General Brian C. Rabbitt of the Department of Justice’s Criminal Division in a press release..The announcement that “Goldman Sachs will admit to wrongdoing and pay penalties, fines and disgorgations totaling nearly $ 3 billion makes the bank responsible for this criminal system.”
CEO David Solomon said Goldman is pleased to complete the process and “put these matters behind us”..He noted that the investigation emphasized that everyone in the company must take responsibility for each other’s actions and address the red flags appropriately. “Almost two years ago I told you all that it is our responsibility to be self-reflective and self-critical. This is more important than ever,” said Solomon.
And Goldman Sachs wasn’t the only one paying. As part of the settlement, former CEO Lloyd Blankfein and Solomon had reclaimed part of their previous compensation as part of the reimbursement payments Wall Street Journal..The clawback was enforced because the DOJ said Blankfein and Solomon, who were CEO and COO respectively at the time, were not properly overseeing their bankers. The details of these recoveries were not disclosed.
Solomon noted that the measures to compensate current and former executives were “perfectly reasonable in the circumstances.”