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Saturday, May 15, 2021

1MDB Scandal Update: Goldman Sachs Wants To Settle For $2.9 Billion

On Thursday, officials revealed that Goldman Sachs has agreed to deposit over $2.9 billion. They hope that this penalty against the United States anti-corruption law will help them out of the 1MDB scandal. The money will be diverted to regulators across the globe. 

According to the deal, Goldman Sachs’ overhead company was saved from pleading guilty in the US. 

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Breaking down the deal, $600 million is for fee disgorgement. This amount was earlier settled with the government of Malaysia. $2.9 billion goes to the United States regulators, the United Kingdom regulators, and the regulators in Singapore. Additionally, the authorities from Hong Kong demanded $350 million from Goldman Sachs for the inconvenience caused by the 1MDB scandal. Furthermore, many of these figures are apart from the $2.9 billion deal. 

Goldman Sachs’ Parent Company Is Free To Enter Into Business Agreements 

Goldman Sachs
Goldman Sachs

Goldman Sachs has pleaded guilty to trying to bribe authorities in order to gain lucrative business opportunities related to the 1MDB scandal. This deal now leaves the company’s parent company free to hold business operations with any companies. 

Hours before the department of Justice announced this, the company’s Malaysian subsidiary also accepted its responsibility in the 1MDB scandal. They admitted to violating the Foreign Corrupt Practices Act. 

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Brian C Rabbitt, the acting Assistant Attorney, released a statement saying that the bank has pleaded guilty to being involved in the 1MDB scandal and has agreed to pay around $3 billion in fee disgorgement, fines, and penalties. 

How Is Goldman Sachs Involved In The 1MDB Scandal?

It’s been two years since this issue has been weighing on David Solomon, the current CEO of the company. A Malaysian financier stole billions from the 1MDB fund of $6.5 billion in corrupt ways. Goldman Sachs is accused of abetting the crime. 

The $6.5 billion was collected to help accelerate the economy. However, the Malaysian businessman, Low Taek Jho, used it to buy expensive hatches, properties across the globe, bribe high-ranking officials, and even buy stakes in “The Wolf Of The Wall Street”, a film directed by Martin Scorsese about Wall Street fraudsters. 

In 2012 and 2013, Goldman Sachs collected around $600 million to fund the 1MDB scheme. Fixed-income experts have claimed that the fee was extremely high. The bank, on their part, accepted that they failed to act reasonably. They also ignored certain red flags while creating bond deals and pursuing fees even though Low was seen as high risk even then. 

On Thursday, David Solomon also released a statement saying that Goldman Sachs has fallen short on assessing the 1MDB scandal. The authorities also reported that Solomon’s pay for 2020 has been reduced substantially due to the incident.

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