Goldman set to plead guilty in Malaysia fraud

An Asian subsidiary of Goldman Sachs will plead guilty to playing a part in the blockbuster 1MDB scandal.

Goldman bankers were accused of helping Jho Low, a Malaysian financier, to funnel billions of dollars out of Malaysia’s 1MDB fund, which was meant to be used for the country’s development.

But the money was used to buy luxury property, fine art and to finance the Martin Scorsese film The Wolf Of Wall Street.

Malaysian financier Jho Low (right), who funneled billions of dollars out of Malaysia’s 1MDB fund, poses with actor Leonardo DiCaprio at the ‘The Wolf of Wall Street’ movie premiere

The scandal has already cost Goldman billions of dollars in settlements with Malaysian authorities and legal fees, though the US banking titan has so far maintained that it was not to blame for the scheme and was deceived by its own bankers.

Two Goldman bankers have been charged for their role in the elaborate money laundering plot.

But Goldman is prepared to accept some culpability in its settlement with the US Department of Justice, according to the Wall Street Journal.

The settlement will reportedly involve a further payment by Goldman of more than £1.5billion.

US central bank, the Federal Reserve, and regulators in the UK, Singapore and Hong Kong have also been involved in the case, and are likely to announce their settlement with Goldman Sachs this week, alongside the deal with the Department of Justice.

The guilty plea could restrict the Asian subsidiary’s ability to do certain types of business, but should not affect Goldman’s overall operations.

Goldman first became involved when it began helping Malaysia raise the 1MDB fund between 2012 and 2013.

In total the investment bank raised around £5billion from selling bonds to investors.

But authorities have questioned the £460million fee that Goldman charged for its services, which was well above market rates at the time, and have claimed that the bank should have done more to prevent the looting of the fund.

David Solomon, Goldman Sachs’ chief executive, apologised to ‘the people of Malaysia’ last year.

Ever since he was appointed as boss of the bank in 2018, Goldman has had the cloud of the 1MDB scandal hanging over it.

Earlier this year, the bank reached a £3billion settlement with Malaysian authorities.

This ended the country’s legal proceedings against the bank and several current and former employees.

Low, the financier at the centre of the scandal who is currently in hiding, has maintained his innocence.

But ex-Goldman banker Tim Leissner – who was employed by the bank between April 1998 and March 2016 – has pleaded guilty to US money laundering charges in the case, while former colleague Roger Ng has pleaded not guilty and is awaiting trial.

Goldman Sachs declined to comment yesterday.

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