Goldman agrees to settle suit over 1MDB for US$79.5m

GOLDMAN Sachs Group agreed to a US$79.5 million settlement with shareholders who blamed lax oversight by the bank for its costly involvement in the 1MDB bribery scandal.

The money will be used to pay for “compliance activities” at the bank, including enhanced internal controls and accounting and the running of “a rigorous anti-corruption compliance program”, according to a pension fund that sued the company and its executives on behalf of shareholders.

The settlement will be paid by insurers for Lloyd Blankfein, Goldman’s former chief executive officer, David Solomon, its current chief executive officer, and 10 other current and former bank executives, according to court papers filed Friday (May 13) in federal court in Manhattan.

Neither Goldman nor the executives admitted to any blame in the settlement, which must be approved by the court.

The 1MDB scandal has already cost the bank more than US$5 billion globally, including US$2.9 billion paid to US regulators.

In 2012, Goldman issued US$6.5 billion worth of bonds to 1MDB, a Malaysian development company. The bonds were earmarked for redevelopment but all but US$2 billion of the money was diverted to pay bribes to government officials, federal prosecutors said.

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In 2020, a Goldman unit admitted to conspiring to violate US anti-bribery laws. It was the first guilty plea ever for the 153-year-old firm.

Lawyers for the pension fund said the settlement was reached Friday and agreed to by all parties. BLOOMBERG