Goldman Sachs CEO David Solomon defends bank in 1MDB scandal

David Solomon at the Bloomberg Global Business forum in New York, in September 2018.
David Solomon at the Bloomberg Global Business forum in New York, in September 2018.PHOTO: REUTERS

NEW YORK (AFP) - The head of Goldman Sachs defended the investment bank's handling of the scandal-plagued Malaysian fund 1MDB on Friday (Dec 21), saying much of the criticism of the financial giant was unfair.

"I cannot stress enough how integrity is a cornerstone of our culture," newly installed chief executive David Solomon said in a year-end message to employees.

He stressed that the bank was working with the authorities to bring to justice the culprits behind a scandal that has roiled Malaysia.

Goldman helped 1Malaysia Development Berhad (1MDB) to issue US$6.5 billion of bonds but Kuala Lumpur accuses the bank and its former employees of misappropriating US$2.7 billion during the process.

Malaysia on Monday filed criminal charges against Goldman Sachs and two of its former employees over the alleged theft of funds used to buy everything from yachts to artwork. The fraud that involved former Malaysian leader Najib Razak contributed to the last government's shock defeat at May elections.

Former Goldman banker Ng Chong Hwa was formerly charged in the case on Wednesday. Malaysia has also taken steps to extradite Ng to the United States to face US criminal charges.

Solomon said he was limited on how much to share on the ongoing probe, but defended the bank's role in the scandal, which he said had "outraged" him.

"While we understand the anger and scepticism, we do not believe that the criticism directed at us accurately reflects who we were then or who we are now," Solomon said, according to the transcript of the video message obtained by AFP and confirmed by a Goldman spokesman.

"We believe our culture and our processes around our due diligence and compliance was strong at the time, and is even stronger today."

Solomon, who took over the top spot at Goldman in October, said the bank conducted due diligence of the bond offerings.

"What we did not anticipate was that a group of individuals and foreign officials would orchestrate such a brazen scheme," he said.