Goldman Sachs to Pay $2.8 Billion, Admit Wrongdoing to Settle 1MDB Charges -- Update

By Dave Michaels, Liz Hoffman and Bradley Hope

Goldman Sachs Group Inc. will pay the U.S. government about $2.8 billion and admit wrongdoing in a Malaysian bribery scandal, settling charges stemming from its work with a corrupt government investment fund.

A Goldman subsidiary in Asia tied to the misconduct is expected to plead guilty this week, according to people familiar with the matter. The parent company will accept an agreement that requires it to admit fault but defers prosecution on the charges, the people said, avoiding a guilty plea that could have crippled its ability to do business.

The settlement with the U.S. Justice Department caps a yearslong scandal that stretched from Southeast Asia to Hollywood, the Middle East, Las Vegas and London. In July, Goldman agreed to pay Malaysia $2.5 billion to settle its case there. Days later Malaysia's former prime minister was found guilty of abuse of power for his role in the scandal.

The deal with the Justice Department calls for Goldman to pay a penalty of about $2.2 billion and pay back around $600 million in ill-gotten gains, although Goldman will be able to offset some of that amount with fines paid to other authorities and agencies, the people said.

The deal doesn't require Goldman to hire a compliance monitor, the people said, a costly undertaking that law-enforcement officials sometimes order after discovering corporate misconduct or oversight lapses. These arrangements can cast long shadows: Goldman is still making quarterly updates to the monitor installed in the wake of the 2008 mortgage crisis. The Wall Street Journal reported late last year that prosecutors were pushing for a monitor in this case.

The total price tag of the settlement is within the parameters the firm had signaled to shareholders and is largely baked into its 2020 financial results. Goldman had $3.2 billion set aside for ongoing regulatory and legal matters as of Sept. 30, most of which is earmarked for the Malaysian matter.

Bloomberg News earlier reported that the settlement was imminent.

Write to Dave Michaels at dave.michaels@wsj.com, Liz Hoffman at liz.hoffman@wsj.com and Bradley Hope at bradley.hope@wsj.com

(END) Dow Jones Newswires

October 20, 2020 10:29 ET (14:29 GMT)

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