'1MDB' Scandal Involving Former Malaysian Prime Minister in Corruption Charges
Fines Owed to Various Countries Total Up to 5 Billion USD
Decision to Reclaim Salaries of Former and Current Executives
[Asia Economy Reporter Kwon Jae-hee] Goldman Sachs has agreed to pay a $2.3 billion (approximately 2.6 trillion KRW) fine to the U.S. Department of Justice in connection with the Malaysia 1MDB scandal, the Wall Street Journal (WSJ) reported on the 22nd (local time).
This is the largest fine in history for a violation of the U.S. Foreign Corrupt Practices Act.
According to the report, Goldman Sachs reached a deferred prosecution agreement with the U.S. Department of Justice on the condition of paying a $2.3 billion fine. In addition to the fine, the DOJ will also recover $600 million (approximately 681 billion KRW) in illicit gains. As a result, the total amount Goldman Sachs will bear is expected to reach $2.9 billion (approximately 3.3 trillion KRW).
In return, Goldman Sachs will avoid a guilty verdict in the trial currently underway at the Brooklyn court in New York City.
Brian Rabbitt, Acting Deputy Assistant Attorney General for the DOJ Criminal Division, stated, "Goldman Sachs bribed foreign senior officials to secure lucrative business related to 1MDB," adding, "Under this agreement, Goldman Sachs admits to the charges and must pay a total of $2.9 billion in fines and disgorgement."
The 1MDB scandal involves the state-owned investment company established in 2009 by former Malaysian Prime Minister Najib Razak under the guise of economic development projects. Najib and his associates are accused of embezzling a total of $4.5 billion through this company.
During this process, Goldman Sachs was investigated for underwriting 1MDB bonds worth $6.5 billion in 2012-2013 and collecting $600 million in fees.
Malaysian prosecutors believe Goldman Sachs misled investors to raise funds despite knowing that the money raised by 1MDB would be misappropriated.
Bloomberg reported that the total fines Goldman Sachs is expected to pay to the U.S., Malaysia, and other countries will exceed $5 billion.
As Goldman Sachs faces this massive fine, it announced it will reclaim a total of $174 million (approximately 19.74 billion KRW) in salaries and bonuses previously paid to CEO David Solomon and former CEO Lloyd Blankfein.
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