Goldman told by US regulators to tighten risk oversight after 1MDB deal: FT

Goldman Sachs Group implemented changes to the internal committees that oversee how its operations work, under pressure from the New York Federal Reserve.
Goldman Sachs Group implemented changes to the internal committees that oversee how its operations work, under pressure from the New York Federal Reserve.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - Goldman Sachs Group was told by regulators to tighten its risk oversight and increase reports of internal debates about deals just after the bank completed US$6.5 billion (S$8.94 billion) of bond financing for Malaysian fund 1Malaysia Development Berhad (1MDB), the Financial Times reported.

Goldman implemented changes to the internal committees that oversee how its operations work, under pressure from the New York Federal Reserve, according to the newspaper. The reforms were agreed upon in 2013 after the Fed pressed Goldman to be more transparent, but were not publicly disclosed, the paper reported.

The New York Federal Reserve told the newspaper it could not discuss its supervision of individual banks. Mr Michael DuVally, a spokesman for Goldman, could not immediately be reached for comment on Sunday (Nov 25).

At least three Goldman bankers were implicated by the US Department of Justice in a multi-year criminal enterprise that included bribing officials in Malaysia and elsewhere, and laundering hundreds of millions of dollars.

The changes, which included rewriting of the charters of Goldman committees that approved three 1MDB bonds, were not directly linked to those deals, according to the FT. They resulted from a wider questioning of controls, including concerns that committee minutes did not record debates in sufficient detail, the paper reported.

Goldman chief executive officer David Solomon said in a Bloomberg TV interview earlier this month that he felt "horrible" about the role former bank employees played in the scandal surrounding the 1MDB fund.