Goldman Sachs Group Inc., an international financial institution accused of conspiring to violate the U.S. Foreign Corrupt Practices Act, has settled with prosecutors on related charges.
Under the plea agreement, Goldman Sachs Group Inc. will pay $2.9 billion for its role in a fund corruption scandal involving the Malaysian firm One Malaysia Development Berhad (1MDB). This is the largest fine of its kind in U.S. history.
Globally, Goldman Sachs will pay a total of more than $5 billion in fines.
Goldman’s Asian subsidiary pleaded guilty Thursday (Oct. 22) after pleading guilty to “willfully and voluntarily” conspiring to violate the Foreign Corrupt Practices Act. Representatives of the company pleaded guilty to violating the U.S. Foreign Corrupt Practices Act (FCPA) by engaging in bribery that resulted in the looting of billions of dollars from a fund designed to promote economic development in Malaysia.
In a press release issued by the U.S. Department of Justice, Special Agent in Charge Ryan L. Korner of the Los Angeles office of the Internal Revenue Service (IRS) Criminal Investigation Division said, “One Malaysia Development Corporation was established to promote the long-term economic development of Malaysia. The strategic initiative. Goldman Sachs admitted today that $1 billion of the money used to help the people of Malaysia was actually diverted to bribe officials in Malaysia and Abu Dhabi to get their business.”
From 2009 to 2014, Goldman Sachs’ firms in Malaysia raised $6.5 billion for the One Malaysia Development Corporation. U.S. authorities say the funds were stolen by people linked to former Prime Minister Najib Razak. Najib, who was removed from office in July, was found guilty and sentenced to 12 years in prison, and is currently serving time for criminal breach of trust, money laundering and abuse of power in connection with the scandal.
The funds raised by Goldman Sachs were used to fund the lavish lifestyle of Malaysian officials. They used the funds to buy mega-yachts, a boutique hotel in Beverly Hills, and a stake in the Hollywood movie “The Wolf of Wall Street.
The U.S. Department of Justice said the company’s involvement violated the Foreign Corrupt Practices Act. The act prohibits U.S. companies from paying bribes to foreign government officials to enlist their help in obtaining business projects.
The bribe provided Goldman Sachs with a role as an energy procurement advisor and an opportunity to participate in a highly anticipated and lucrative initial public offering of Yima Development’s energy assets.
The settlement agreement allowed the company to avoid a criminal conviction.
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