Goldman Sachs gets record 1MDB fine; CEO faces clawback

New York: Goldman Sachs Group will pay a record foreign bribery penalty in the US and will enter a guilty plea for the first time ever for its role in the plundering of Malaysia’s 1MDB investment fund. A Goldman subsidiary in Malaysia pleaded guilty to a single charge for its role in a scheme to divert billions of dollars raised for economic development in Malaysia. The Wall Street giant will also force CEO David Solomon and his predecessor Lloyd Blankfein to return some of their compensation.

The parent company avoided conviction in a deal known as a deferred-prosecution agreement. That designation is a win for Goldman Sachs, because a conviction might have risked losing some institutional clients that are restricted from working with financial firms with criminal records.

The bank will pay more than $2.3 billion in the plea deal, US prosecutor Alixandra Smith said, the largest penalty in US history for a violation of the Foreign Corrupt Practices Act. From about 2009 to 2014, the bank’s Malaysia unit “knowingly and willfully agreed to violate the Foreign Corrupt Practices Act by corruptly promising, and paying bribes to foreign officials in order to obtain and retain business for Goldman Sachs,” the bank’s general counsel, Karen Seymour, told US District Judge Margo Brodie on Thursday.

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