KUALA LUMPUR – An Asia-based Goldman Sachs is expected to plead guilty to charges in the United States to resolve corruption and bribery charges over the looting of billions of dollars from 1Malaysia Development Bhd (1MDB), The New York Times reported, citing people familiar with the matter.
The source told the paper yesterday that the bank’s parent company will admit mistakes but not itself enter a guilty plea as part of the deal with federal prosecutors.
The bank will also avoid the appointment of an outside monitor to review its compliance procedures.
The paper did not state which Asian subsidiary of Goldman Sachs will plead guilty, but the bank has a Malaysia office.
Sources said the settlement requires the bank to pay more than US$2 billion (RM8.2 billion) in penalties to the US Department of Justice, and securities and banking regulators, and a formal announcement will be made tomorrow morning.
Goldman helped raise US$2.7 billion in bonds for 1MDB, now the subject of criminal investigations in Malaysia and the US.
The proceeds were used to finance lavish lifestyles of Malaysian elites connected to former prime minister Datuk Seri Najib Razak. The bank earned US$600 million in fees to arrange the bond sales.
Najib was recently sentenced to 12 years’ prison after the Kuala Lumpur High Court found him guilty of diverting an estimated RM42 million from SRC International Sdn Bhd, a then unit of 1MDB. He is appealing the decision.
The SRC International trial is one of three cases against Najib. The other two pending trials are over 21 charges of money laundering involving RM2.6 billion directly from 1MDB and alleged abuse of power and cover-up of a 1MDB audit report.
The New York Times estimates that the fines and restitution Goldman will pay over 1MDB are more than the US$5 billion it paid in 2016 in a civil settlement over its role in marketing and selling faulty mortgage securities to investors in the run-up to the 2008 financial crisis.
If Goldman pled guilty, the bank could cause complications for some of its businesses, it reported, but the outcome had not been seriously under consideration for months while the ramifications of a subsidiary doing the same are less serious.
Today, a major fundraiser for US president Donald Trump, Elliot Broidy, pleaded guilty to conspiring to violate foreign lobbying laws after accepting US$9 million from now fugitive financier Low Taek Jho, to try to convince the Trump administration to end the 1MDB investigation, and take other steps.
Broidy had agreed to forfeit US$6.6 million and to cooperate with prosecutors. – The Vibes, October 21, 2020
