An Asian subsidiary of Goldman Sachs will plead guilty to US charges over the investment bank’s role in the defrauding of 1Malaysia Development Bhd, in a deal that will bring closure to a years-long probe, The New York Times (NYT) reported today.
The name of the Asian subsidiary was not revealed.
“The Wall Street bank’s parent company will admit mistakes, the person said, but will not itself have to enter a guilty plea as part of the deal with federal prosecutors,” said the report referring to Goldman.
“The bank will also avoid the appointment of an outside monitor to review its compliance procedures,” it said.
To settle the case, the bank will pay more than US$2 million (RM8.4 billion) in penalties. A statement of facts is also to be released with the settlement.
People briefed on the plans said the agreement will be officially announced tomorrow.
The bank’s meeting of the Justice Department’s terms will end one of the worst scandals in Goldman Sach’s history.
According to NYT, Goldman had never before the 1MDB case had to plead guilty despite alleged involvement in past financial scandals, but warned that a statement of facts set to be released along with the settlement tomorrow would put the bank “in a poor light”.
A Goldman spokesman declined the NYT’s request for comment
Goldman pocketed US$600 billion in fees for helping 1MDB to raise US$6.5 billion via the sale of bonds in 2012-2013.
Goldman reached a settlement with Malaysia in July to end criminal charges and claims for restitution over the losses suffered by the government in the 1MDB affair. Under the terms of the agreement, the bank would pay Malaysia US$2.5 billion upfront and guarantee the return of US$1.4 billion worth of seized assets linked to 1MDB.
In total, Goldman should pay roughly US$5 billion to settle the case with Malaysia, the Justice Department and other agencies.