Goldman poised to pay more than US$2 bil in DoJ’s 1MDB probe

The Goldman Sachs Group’s deal with the US Department of Justice follows a similar agreement with Malaysian authorities. (Bloomberg pic)

WASHINGTON: Goldman Sachs Group Inc has reached a long-awaited pact with the US Department of Justice to pay more than US$2 billion for the bank’s role in the 1MDB scandal.

The deal may be announced within days, according to people familiar with the matter.

The accord, part of an international action, will let the parent company avoid a US criminal conviction, according to the people, who asked not to be named discussing the confidential talks.

The payment to the DoJ is broadly in line with the bank’s prior reserves and analysts’ estimates.

The deal, expected to come just weeks before the US presidential election, would remove uncertainty for the bank following years of investigations and negotiations with the department over the firm’s fundraising for 1MDB.

It follows an agreement in July to settle a related probe with Malaysia, in which the bank promised to pay US$2.5 billion. Malaysia dropped criminal charges against the New York-based company in early September.

A representative for Goldman Sachs declined to comment, and representatives for the DoJ did not respond to messages seeking comment.

In all, Goldman Sachs may pay roughly US$5 billion once accords with Malaysia, the Department of Justice and other agencies are tallied together.

In Singapore, authorities plan to levy a financial penalty and issue a warning with conditions, and if the company breaches them, Goldman Singapore could be prosecuted, people familiar with the matter said.

The Monetary Authority of Singapore, Attorney-General’s Chambers and police did not immediately reply to an email seeking comment.

Probes of the Wall Street firm focused on its work raising US$6.5 billion in 2012 and 2013 for 1MDB, much of which was later allegedly siphoned off by several parties. Goldman’s investment banking group, led at the time by now CEO David Solomon, collected US$600 million from the bond sales.

Authorities in Asia, the US and Europe have spent years tracing out the conspiracy and tracking down cash and assets around the globe, including condos, jewellery and art.

Goldman has long blamed rogue employees, asserting it had no idea the money it helped raise would be diverted from development projects. One former Goldman Sachs partner, Tim Leissner, pleaded guilty in the US to conspiring to launder money and violating foreign bribery laws.

Another executive was charged with foreign bribery offences.

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