Goldman to Recoup Top Executives' Pay After 1MDB Fines -- Update
October 22 2020 - 12:02PM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc. is seizing tens of millions of dollars
from top executives after agreeing to a costly settlement to
resolve multiple government investigations into its role in a
Malaysian bribery scandal.
The Wall Street firm will recoup money from Chief Executive
David Solomon, his predecessor Lloyd Blankfein, and other current
and former executives, people familiar with the matter said, as it
prepares to admit to compliance lapses in its dealings with a
corrupt Malaysian investment fund, known as 1MDB.
Goldman has agreed to pay about $2.8 billion to the U.S. Justice
Department and other global regulators to settle 1MDB allegations,
The Wall Street Journal reported Tuesday. That is on top of the
$2.5 billion it agreed in July to pay the government of Malaysia.
The penalties amount to about eight months of profits for the Wall
Street firm.
In Brooklyn federal court on Thursday, a Goldman subsidiary in
Malaysia said it would plead guilty to conspiring to violate U.S.
antibribery laws. The bank is expected later Thursday to finalize
its settlement with the Justice Department and regulators in the
U.K., Singapore and New York state.
The financial moves -- a combination of clawbacks for departed
executives and pay cuts for current ones -- are a concession to
shareholders who will shoulder the financial cost of the scandal
and employees whose own bonuses this year are likely to shrink
because of it.
They also are an admission of sorts that the crux of the
government's case against Goldman, that it failed to properly
oversee its senior bankers and fostered a win-at-all-cost culture,
has some merit. The exact amount at stake couldn't be learned.
In 2012 and 2013, Goldman helped raise $6.5 billion for 1MDB by
selling bonds to investors. Prosecutors say much of that money was
stolen by an adviser to the fund named Jho Low, aided by two
Goldman bankers and associates in the Malaysian and Emirati
governments.
Goldman had long portrayed the bankers -- Timothy Leissner, who
has pleaded guilty, and Roger Ng, who has maintained his innocence
-- as rogue employees who hid their activities and Mr. Low's
involvement in the deals from their bosses. Mr. Low has denied the
allegations against him.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
October 22, 2020 11:47 ET (15:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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