Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) to end a probe of its role in the 1MDB corruption scandal.
The bank’s Malaysian subsidiary also admitted in US court that it had paid more than $1bn in bribes to win work raising money for the Malaysian state-owned wealth fund.
US officials said the record settlement reflected Goldman’s “central” role in a “massive corruption scheme”.
Goldman admitted it had fallen “short”, calling it an “institutional failure”.
The 1MDB scheme was a global web of fraud and corruption, in which billions of dollars ostensibly raised for public development projects in Malaysia instead landed in private pockets, including those of the country’s former prime minister Najib Razak.
In July, Najib was found guilty in Malaysia on all seven counts in the first of several multi-million dollar corruption trials and sentenced to 12 years in jail.
Probes of Goldman Sachs focused on its help raising $6.5bn in 2012 and 2013 for the fund formally known as 1Malaysia Development Bhd (1MDB), work authorities said earned the firm more than $600m.
In all, the investment bank is due to pay about $5bn in penalties – about two thirds of its 2019 profits – to regulators around the world, including in the UK, to resolve cases that have severely tarnished the firm’s reputation.
Goldman’s board also said it will recoup or withhold $174m in compensation awarded to executives, including retired boss Lloyd Blankfein, under whose watch the scandal happened.
“The board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm,” it said in a statement.
“We have to acknowledge where our firm fell short,” chief executive David Solomon said. “While many good people worked on these transactions and tried to do the right thing, we recognise that we did not adequately address red flags and scrutinise the representations of certain members of the deal team… as effectively as we should have.”
Three months ago, Goldman Sachs reached a $3.9bn settlement with the Malaysian government for its role in the corruption scandal.
The settlement included a $2.5bn cash payout by Goldman, while the investment bank said it would guarantee that the government would receive at least $1.4bn from money recovered from the scheme.
The deal resolved charges in Malaysia that Goldman had misled investors.
Hong Kong regulators on Thursday said they were due to receive $350m in fines. Goldman has also agreed to pay $126m in penalties in the UK and $122m in penalties in Singapore.
- United Nations at 75 plagued by new crises and cash crunch
- Coronavirus: Clashes in Naples (Italy) over tightening restrictions
- US election 2020: How Trump has changed the world
- Sudan normalizes relations with Israel – the latest in a series of Arab League countries to do so
- Poland abortion ruling: Protests spread across the country