GOLDMAN Sachs CEO David Solomon has apologised to Malaysians over the bank’s role in the 1Malaysia Development Bhd scandal.

“It’s very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government,” Solomon said at a conference call with analysts after reporting the investment bank’s fourth-quarter earnings yesterday.

Prime Minister Dr Mahathir Mohamad, who is in Dakar, Senegal, also tweeted Solomon’s apology.

In November, Tim Leissner, who once headed Goldman Sachs’ Southeast Asian unit, pleaded guilty to violating US anti-bribery and money-laundering laws and agreed to pay US$43.7 million (RM184 million) in restitution of ill-gotten gains.

Another former Goldman Sachs banker, Roger Ng or Ng Chong Hwa, is languishing in a Malaysian jail while the US Department of Justice seeks his extradition.

Solomon apologised for Leissner’s role in the debacle but reiterated that Goldman Sachs had been misled by Leissner and senior officials in the Malaysian government about the role of a key intermediary in the scandal, Low Taek Jho, better known as Jho Low.

“Per Leissner’s role in that fraud, we apologise for the Malaysian people,” AFP reports Soloman as saying.

Goldman has suffered a “reputation dent” tied to the scandal, Solomon acknowledged, but added that the effect on clients had been “de minimus”.

Goldman Sachs reported better-than-expected profits yesterday despite higher legal costs as it works through the 1MDB scandal.

The investment bank notched fourth-quarter profits of US$2.3 billion, after posting a US$2.1 billion loss in the same period of the prior year due to one-time costs associated with US tax reform.

Revenues were about flat compared to a year earlier at US$8.1 billion.

Goldman Sachs also increased the funds it set aside for litigation and regulatory proceedings to US$516 million from US$9 million in the year-ago period.

1MDB is the subject of numerous government probes but the bank did not say what the legal funds were earmarked for.

Goldman Sachs arranged three bond sales in 2012 and 2013 to fund 1MDB, raising US$6.5 billion to supposedly attract foreign investments. For its troubles, it charged 1MDB US$600 million, a fee that dwarfs what banks typically makes from government deals.

Finance Minister Lim Guan Eng told the New York Times recently that Goldman Sachs needs to “come to terms” with its role in the multi-billion-dollar 1MDB scandal and not attempt to pin its misdeeds on rogue bankers. – January 17, 2019.