Goldman Sachs subsidiary pleads guilty to role in $2.6 billion embezzlement in Malaysia
The firm admitted to violating provisions of the Foreign Corrupt Practices Act.
October 22, 2020, 4:30 PM
• 3 min read
A subsidiary of Goldman Sachs pleaded guilty on Thursday for its role in a scandal involving the embezzlement of billions of dollars from a Malaysian government investment fund known as 1MDB.
The subsidiary pleaded guilty to violating anti-bribery provisions of the Foreign Corrupt Practices Act, admitting it contributed to the misappropriation of $2.6 billion in a bribery scheme that spread from Southeast Asia to the United States and has been a costly and lasting black eye for the prominent investment bank.
Goldman Sachs itself has entered into a deferred prosecution agreement, which will be announced during a noon news conference at the Justice Department. The bank will have to pay more than $2 billion in penalties.
The Securities and Exchange Commission has said Goldman Sachs ignored warning signs of fraud as it pursued the lucrative fees from the Malaysian business.
“Guilty, your honor,” said Karen Seymour, Goldman Sachs general counsel, on behalf of the Malaysian subsidiary. “From approximately 2009 to 2014, Goldman Sachs Malaysia and certain of its agents and employees, and together with others, knowingly and willfully agreed to violate the Foreign Corrupt Practices Act.”
She conceded the bank paid bribes in order to win lucrative business tied to 1MDB.
“The government has given a discount off the bottom of the minimum fine and so the total monetary penalty is $2.3 billion,” said Assistant U.S. Attorney Alexandra Smith.
The 1MDB scandal involved the theft of billions of dollars, which was allegedly laundered by associates of then-Malaysian Prime Minister Najib Razak, who was convicted on corruption charges in Malaysia in July.
The scheme also ensnared former Republican and Trump fundraiser Elliott Broidy, who pleaded guilty earlier this week to violating federal lobbying laws.
Broidy agreed to take millions of dollars in exchange for trying to persuade the Trump administration to drop the investigation into 1MDB and Jho Low, a Malaysian businessman charged in the theft.