Thursday , November 26 2020
Home / Amol Agrawal: Mostly Economics / Goldman Sachs pays many a fine…

Goldman Sachs pays many a fine…

Summary:
Goldman Sachs has agreed that it played a key role in the 1MDB scandal in Malaysia. In a globally coordinated resolution, GS to pay a record fine of USD 2.9 billion: The Goldman Sachs Group Inc. (Goldman Sachs or the Company), a global financial institution headquartered in New York, New York, and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately .5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees.  Goldman Sachs

Topics:
Amol Agrawal considers the following as important: ,

This could be interesting, too:

Amol Agrawal writes Responses of International Central Banks to the COVID-19 Crisis

Amol Agrawal writes Regulating Fintech in Europe: Lessons from the collapse of Wirecard

Amol Agrawal writes Gulags, crime, and elite violence: origins and consequences of the Russian mafia

Amol Agrawal writes Central Bank of Israel invests forex reserves in equity to boost returns

Goldman Sachs has agreed that it played a key role in the 1MDB scandal in Malaysia.

In a globally coordinated resolution, GS to pay a record fine of USD 2.9 billion:

The Goldman Sachs Group Inc. (Goldman Sachs or the Company), a global financial institution headquartered in New York, New York, and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees.  Goldman Sachs will pay more than $2.9 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere. 

Within USD 2.9 billion, Federal Reserve has asked GS to pay USD 154 million:

The Federal Reserve Board on Thursday announced it has fined the Goldman Sachs Group, Inc. $154 million for the firm’s failure to maintain appropriate oversight, internal controls, and risk management with respect to Goldman’s involvement in a far-reaching scheme to defraud a Malaysian state-owned investment and development company, 1Malaysia Development Berhad (1MDB).

In 2012 and 2013, Goldman arranged and underwrote three bond offerings that raised $6.5 billion for 1MDB. Certain former Goldman bankers in Asia participated in a scheme with Malaysian businessman Low Taek Jho and others to divert substantial portions of the proceeds from the 1MDB offerings for their personal benefit and to pay bribes to certain foreign government officials. Goldman’s transaction approval processes and internal controls failed to detect or prevent the scheme or to address obvious red flags around the 1MDB offerings. The Board is requiring Goldman to improve its risk management and oversight of significant and complex transactions, enhance its due diligence related to these transactions, and improve its anti-bribery compliance program.

The Board’s action is being taken in conjunction with actions by other authorities including the U.S. Department of Justice, the Securities and Exchange Commission, the New York Department of Financial Services, the U.K. Financial Conduct Authority, and the Bank of England Prudential Regulation Authority, and other foreign authorities. The penalties and disgorgement announced by all of the agencies total approximately $2.9 billion.

Bank of England’s Prudential Regulatory Authority has fined the USD 63 million.

This is hardly the first time. GS (and other famed finance names) have paid so much fines since 2008 crisis. I mean it is one thing to do badly on account of bad bets. This is large scale fraud at several levels. Yet Goldman Sachs (and other finance top names) remain top choices for employment.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

Leave a Reply

Your email address will not be published. Required fields are marked *