“Over a period of five years, Goldman Sachs participated in a sweeping international corruption scheme, conspiring to avail itself of more than $1.6 billion in bribes to multiple high-level government officials across several countries so that the company could reap hundreds of millions of dollars in fees, all to the detriment of the people of Malaysia and the reputation of American financial institutions operating abroad,” [Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York].
The timing said it all as the Department of Justice’s deferred prosecution agreement with America’s most powerful bank was slipped out hours before the last key presidential debate. It was an obvious ploy to bury the news that would otherwise have dominated the global headlines.
To escape the dock the bank was forced to enter a criminal guilty plea for its subsidiary in Malaysia, admit wrong doing and pay a series of whopping fines across the globe. It is regarded as an unprecedented grovel by America’s haughtiest bankers.
Fines to the Department of Justice (DOJ) totalled $2,9 billion. Hong Kong regulators simultaneously announced Goldman will pay them $350m in fines, while the UK has agreed $126m in penalties and Singapore $122m. These are all in addition to fines agreed with the Malaysian government totalling $3.9 billion in August.
Representatives of the DOJ confirmed it is the largest fine ever paid relating to a foreign corrupt practices case and cited an initial failure to cooperate on the part of the bank, which “significantly delayed producing relevant evidence, including recorded phone calls”.
“We have to acknowledge where our firm fell short,.. we did not adequately address red flags… as effectively as we should have.” responded chief executive David Soloman, who was personally involved in authorising the deals which Sarawak Report first called out for being evidently suspicious back in 2013, but which the bank ignored for years.
Technically, as the press release from the Department of Justice laid out, the bank has admitted “to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business” .
That sum refers to the massive kickbacks received by Najib and the bosses of the sovereign fund IPIC – $160 million alone was used to pay off the purchase of the super yacht Topaz procured by the Abu Dhabi royal Sheikh Mansour.
As widely anticipated the powerful institution has escaped criminal convictions as have its bosses, apart from the former Southeast Asia head Tim Leissner, a relatively lowly figure, who has pleaded guilty and awaits conviction, and his colleague Roger Ng, head of investment banking for GS Malaysia, who was extradited to the US and is due to face trial in March.
However, Department of Justice prosecutors have nonetheless extracted their pound of flesh by enforcing unprecedented and humiliating confessions from the so-called ‘Masters of the Universe’ and by holding a ‘deferred criminal prosecution’ over their heads for conspiracy to commit bribery.
Goldman Sachs entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Eastern District of New York charging the Company with conspiracy to violate the anti-bribery provisions of the FCPA. GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.
It is a confession that would once have been considered unheard of and represents a massive blow to the reputation of the bank, effectively clipping its wings after years of being regarded untouchable and all-powerful. The DOJ, which has doggedly tracked 1MDB’s missing billions since 2015, did not pull its punches:
“Goldman Sachs today accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Today’s resolution, which requires Goldman Sachs to admit wrongdoing and pay nearly three billion dollars in penalties, fines, and disgorgement, holds the bank accountable for this criminal scheme and demonstrates the department’s continuing commitment to combatting corruption and protecting the U.S. financial system.” [DOJ press release].
The statement emphasises the mission statement laid out by the US joint investigation team headed by former AG Lorreta Lynch and FBI director Andy McCabe at the launch of their 1MDB prosecutions when they stated the threat that global financial crimes facilitated by actors such as Goldman Sachs not only damage victims like Malaysia, but threaten the integrity of the US and other advanced economies as well.
Just last week the former chairman of the Republican National Committee, Elliot Broidy, himself pleaded guilty to receiving million dollar payments in illegal undeclared lobbying fees from Jho Low to attempt to derail this investigation by influencing senior figures.
Broidy had agreed a success fee of $75 million if the case was dropped and had also embarked on a separate proposed contract with the Najib government that promised tens of millions a year for ‘cyber security’ provision. He is just one of a clutch of US top officials and celebrity figures who have been tainted by the scandal.
“Greed eventually exacts an immense cost on society, and unchecked corrupt behavior erodes trust in public institutions and government entities alike. This case represents the largest ever penalty paid to U.S. authorities in an FCPA case.” said William F. Sweeney Jr. of the FBI’s New York Field Office.
The DOJ confirmed in its announcement that Jho Low with the assistance of Tim Leissner and Roger Ng misappropriated more than $2,7 billion out of the $6.5 raised by Goldman Sachs in three bond offerings for 1MDB from which they payed “over $1.6 billion in bribes to Malaysian, 1MDB, IPIC, and Aabar officials.”
“Today’s guilty pleas demonstrate that the law applies to everyone, including large investment banks like Goldman Sachs.
added Ryan L. Korner from the IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office. However, there have been mixed benefits for Malaysia owing the its present continuing betrayal by the country’s own power-mongers.
The ex-Prime Minister may equally been convicted of his guilt in the affair, however he remains at large, voting in Parliament and propping up an illegal minority government.
[More to follow on this case….]