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Goldman Sachs to pay out US$122m to Singapore authorities over 1MDB scandal
GOLDMAN Sachs Singapore will have to pay US$122 million to the Singapore authorities over its involvement in the 1MDB scandal.
The Commercial Affairs Department (CAD) has also served Goldman Sachs Singapore with a 36-month conditional warning, in lieu of prosecution, for three counts of corruption offences punishable under Section 5(b)(i) of the Prevention of Corruption Act, Chapter 241.
The Monetary Authority of Singapore (MAS) has as well directed the Singapore unit of Goldman Sachs to appoint an independent external party to conduct a review of its remedial measures, said a joint statement by the Attorney-General's Chambers, Singapore (AGC), CAD, and MAS that was issued Friday morning at 1.11am.
In a separate statement on Friday night, MAS clarified that the US$122 million payment was not a fine -- which can only be imposed by the courts -- but is instead a payment following the conditional warning that was administered by CAD to Goldman Sachs Singapore on Thursday this week.
The sum of US$122 million is the largest payment made by any financial institution to the Singapore government to date for a crime-related matter.
Goldman Sachs Singapore will also disgorge another sum of US$61 million to the Malaysian authorities, which will be paid in accordance with the deferred prosecution agreement that the banking group has entered with the US Department of Justice (DOJ). It will as well continue to cooperate with CAD in its 1MDB-related investigations, the regulators said.
The US bank agreed with the DOJ and other regulators to accepting fault in underwriting bond offerings that raised US$6.5 billion for the Malaysian state fund.
Goldman Sachs will pay more than US$2.9 billion as part of a coordinated resolution with criminal and civil authorities in the US, the United Kingdom, Singapore, and elsewhere, the DOJ said in a statement on Thursday, US time.
DOJ said Goldman Sachs has admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA), in connection with a scheme to pay over US$1 billion in bribes to Malaysian and Abu Dhabi officials to obtain "lucrative business" for Goldman Sachs.
"The department has recovered, or assisted in the recovery of, in excess of US$1 billion in assets for Malaysia associated with and traceable to the 1MDB money laundering and bribery scheme," DOJ said.
Over in Hong Kong, the financial regulator on Thursday slapped the Wall Street bank's local subsidiary with a record US$350 million fine.
This was amid "serious lapses and deficiencies in its management supervisory, risk, compliance and anti-money-laundering controls" that contributed to the misappropriation of US$2.6 billion from US$6.5 billion that 1MDB raised in three bond offerings in 2012 and 2013, Hong Kong's Securities and Futures Commission (SFC) said.
It said that Goldman Sachs Asia, the compliance and control hub of Goldman Sachs in Asia and that is based in Hong Kong, had "significant involvement" in the origination, approval, execution and sales process of the three 1MDB bond offerings. Goldman Sachs Asia received 37 per cent of the total revenue of US$567 million generated from the bond offerings - or US$210 million - the largest share among the various Goldman Sachs entities, SFC said.
Tim Leissner, the former head of Goldman's Southeast Asia business, pleaded guilty in 2018 to criminal charges brought by the DOJ against him for conspiring to commit money laundering and to violate the FCPA.
"The SFC's investigation found that Leissner was essentially given a free rein in the execution of the 1MDB bond offerings, enabling him to provide misleading information to - or conceal information from - Goldman Sachs without being adequately challenged," said the SFC.
DOJ said Goldman Sachs also admitted that, although employees serving as part of Goldman's control functions knew that any transaction involving Malaysian financier Jho Low posed a significant risk, and although they were on notice that Low was involved in the transactions, they did not take reasonable steps to ensure that Low was not involved.
"Goldman Sachs further admitted that there were significant red flags raised during the due diligence process and afterward - including but not limited to Low's involvement - that either were ignored or only nominally addressed so that the transactions would be approved and Goldman Sachs could continue to do business with 1MDB."
Low, who has also been indicted for conspiracy to commit money laundering and violate the FCPA, remains a fugitive.
Goldman Sachs Malaysia pleaded guilty to DOJ charges over its role in the 1MDB scandal, Reuters reported on Thursday, Singapore time.
Reuters reported that Goldman Sachs said in a court hearing it would plead guilty to violating the anti-bribery provisions of the FCPA.
The Wall Street Journal reported this week that the 1MDB scandal will cost Goldman Sachs more than US$5 billion to resolve, translating to about two-thirds of a year's earnings.