It was reported that 98% of the investment was lost, according to the Guardian. Libyans managing the fund had reportedly paid $1.2 billion to Goldman to invest in nine equity derivatives trades, which completely evaporated. Reuters reported back in October of 2016 on how the bank managed to avoid guilty charges in a 2.5 year legal battle against the Libyan government when it was accused of mishandling the country’s $67 billion fund. This is not the first sovereign wealth fund fiasco that the bank has been involved in. “I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs,” he stated in a Brooklyn court following his guilty plea. He was fined $1.42 million by the Fed, and has been permanently banned from practice. One of the two ex-Goldman bankers who were indicted for their involvement, former partner Tim Leissner, has already pleaded guilty to charges of conspiring to commit bribery, money laundering, and violating Foreign Corrupt Practices.
Goldman has never previously pleaded guilty to any criminal wrongdoing in its 150 year history. In addition to the large fine that Goldman will likely have to pay, the US Department of Justice is also seeking a guilty plea for the company itself, according to a Financial Times article from April 2019. The 1MDB scandal erupted in 2015 when Malaysia’s then-Prime Minister Najib Razak was accused of funneling millions from the fund to his private bank account.Īs more information emerged, the public found out that 1MDB was nearly $11.73 billion in debt. The bank itself walked away with $600 million in fees associated with the transaction. The bank has been accused of being complicit in the misappropriation of a substantial portion of the $6.5 billion that the bank helped raise for the Malaysian sovereign wealth fund, 1MDB. Goldman Sachs Headquarters in New York (Photo: Quantumquark (CC BY-SA 3.0)) Yahoo Finance quoted CEO David Solomon as saying that a “preponderance” of the bank’s US$1.1 billion loss can be attributed to money it has set aside for the guilty verdict it is likely to receive. One of the largest American investment banks, Goldman Sachs, reported a 24.8 percent drop in fourth quarter profits on Wednesday, which is likely connected to its involvement in the 1Malaysia Development Berhad (1MDB) scandal.
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