KUALA LUMPUR • Goldman Sachs Group yesterday reached a deal to settle a probe into the bank's role in Malaysia's 1MDB corruption scandal, which included total penalties of nearly US$3 billion (S$4.1 billion).
The bank was investigated for its role in raising US$6.5 billion in three bond sales between 2012 and 2013 for the 1Malaysia Development Berhad (1MDB) state fund.
HOW DID BILLIONS GO MISSING?
1MDB is a state fund launched in 2009 by former Malaysian prime minister Najib Razak to promote economic development.
It raised billions of dollars in bonds, ostensibly for investment projects and joint ventures, between 2009 and 2013.
The Malaysian and United States authorities say US$4.5 billion, including some of the money Goldman helped raise, was stolen from 1MDB in an elaborate scheme that spanned the globe and implicated high-level officials of the fund, Najib and others.
The siphoned funds were used to buy luxury assets and real estate, including hotels, a private jet, art by Picasso and Monet, and to finance Hollywood films, US lawsuits said.
The US Department of Justice has sought to recover about US$2.1 billion in assets linked to diverted 1MDB funds - the largest asset recovery action brought by the agency.
HOW IS GOLDMAN SACHS INVOLVED?
Goldman has been investigated by regulators in at least 14 countries for its role in underwriting the 1MDB bond issues.
The work earned the bank US$600 million in fees and led to large bonuses for some of its executives, officials have said, although the bank has disputed that figure.
The US Justice Department said on Thursday that Goldman violated the US Foreign Corrupt Practices Act that bans US firms from paying foreign government officials for help in getting or keeping business. Malaysian prosecutors said the bank misled investors over the bond sales.
Goldman has in the past said certain members of the former Malaysian government and 1MDB officials lied to it about how proceeds from the bond sales would be used.
On Thursday, Goldman's Malay-sian unit pleaded guilty to violating US foreign bribery rules.
HOW MUCH WILL GOLDMAN PAY?
Goldman will make a US$2.3 billion payment to the US Justice Department and other regulators, and a further US$600 million in disgorgement of ill-gotten gains to settle the US probe and avoid a criminal conviction at the group level.
This is on top of the US$3.9 billion that Goldman has agreed to pay Malaysia in exchange for dropping all criminal charges against the bank.
Goldman's Asia unit will also pay Hong Kong's markets watchdog US$350 million for serious lapses and deficiencies in its management controls that contributed to the misappropriation of US$2.6 billion in funds that it helped raise for 1MDB.
ARE THERE ANY OTHER CASES AGAINST GOLDMAN?
The US Justice Department has filed criminal charges against two former Goldman bankers tied to the scandal, Tim Leissner and Roger Ng.
Leissner pleaded guilty to the charges in 2018, while Ng's case is pending in a New York court. Ng is expected to face separate charges in Malaysia after his US trial concludes.
This week, Abu Dhabi's International Petroleum Investment Company dropped a lawsuit against Goldman to recover losses suffered from the bank's dealings with 1MDB.
WHO ELSE HAS BEEN IMPLICATED?
After losing an election in 2018, Najib was charged with 42 cri-minal offences in Malaysia, mostly linked to losses at 1MDB and other state entities.
In July, he was found guilty of corruption and money laundering for illegally receiving US$10 million from a former 1MDB unit and sentenced to 12 years in prison. He denies wrongdoing and has filed an appeal.
Elliott Broidy, a former fund-raiser for US President Donald Trump, pleaded guilty this week to a charge that he illegally lobbied Mr Trump to drop a probe into 1MDB.
The Malaysian and the US authorities have also filed charges against Malaysian financier Jho Low over his alleged central role in the 1MDB fraud. His whereabouts are unknown.