UK regulators fine Goldman Sachs over Malaysian fraud after £2.2bn enforcement

UK regulators fine Goldman Sachs over Malaysian fraud after £2.2bn enforcement
The 1Malaysia Development Berhad fund was set up in 2009 by former prime minister Najib Razak to promote economic development (Joshua Paul/AP)

UK regulators have joined others around the globe to level heavy penalties at subsidiaries of Goldman Sachs for its role in a fraud scheme which looted billions of dollars from a Malaysian sovereign wealth fund and used the money to fund Hollywood movies, including the Wolf Of Wall Street.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) fined Goldman Sachs International (GSI) £96.6 million.

It was part of a larger co-ordinated resolution with Goldman Sachs Group over the 1Malaysia Development Berhad (1MDB), which will cost the bank 2.9 billion US dollars (£2.2 billion).

There is no amnesty for firms that tackle financial crime poorly, and the size of GSI’s fine reflects that

Mark Steward, FCA

Goldman Sachs Malaysia agreed on Thursday to pay more than two billion dollars (£1.5 billion) in the foreign corruption investigation.

The company entered the plea in federal court in Brooklyn. As part of its plea, the company admitted that it “knowingly and wilfully” conspired to violate US anti-bribery laws.

Malaysian and US prosecutors had alleged that bond sales organised by Goldman Sachs provided one of the means for associates of former prime minister Najib Razak to steal billions over several years from a fund that was ostensibly set up to accelerate Malaysia’s economic development.

In July, Malaysia’s government said it had reached a 3.9 billion US dollars (£3 billion) settlement with Goldman Sachs in exchange for dropping criminal charges against the bank over bond sales that raised money for the fund.

In court on Thursday, Goldman Sachs’ general counsel, Karen Seymour, said that agents and employees of Goldman Sachs Malaysia had violated the US Foreign Corrupt Practices Act by “corruptly promising and paying bribes to foreign officials in order to obtain and retain business for Goldman Sachs”.

The fund, 1Malaysia Development Berhad, was set up in 2009 by Mr Najib to promote economic development. It relied primarily on debt to fund investment and economic development projects and was overseen by senior Malaysian government officials, according to court records.

Mr Najib set up 1MDB when he took office in 2009, but it accumulated billions in debts, and US investigators allege that at least 4.5 billion US dollars (£3.4 billion) was stolen from the fund and laundered by his associates.

Public anger over the corruption allegations contributed to the shocking election defeat of Mr Najib’s long-ruling coalition in May 2018.

FCA executive director of enforcement Mark Steward said: “Firms have a crucial role to play in tackling financial crime, and in helping to maintain the integrity of the financial system.

“GSI’s failure to take appropriate action in this case shows that it did not take this responsibility seriously. When confronted with allegations of bribery and staff misconduct, the firm’s mishandling allowed severe misconduct to go unaddressed.

“There is no amnesty for firms that tackle financial crime poorly, and the size of GSI’s fine reflects that.”

More in this section

Sponsored Content

Recruit Ireland



To check out roles from a range of companies 


Wednesday, May 12, 2021

  • 1
  • 6
  • 14
  • 19
  • 31
  • 47
  • 2

Full Lotto draw results »