GOLDMAN Sachs has agreed to pay more than US$2 billion (RM8.3 billion) in a deal with the US Justice Department to avoid criminal prosecution over the investment bank’s role in the 1Malaysia Development Bhd scandal, Bloomberg reported today.

Unidentified sources familiar with the case said the agreement was just days away from being announced.

The settlement will end years of US investigations into the bank’s alleged participation in the defrauding of the Malaysian investment fund. 

A Goldman representative declined Bloomberg’s request for comment while the DoJ did not respond to the same request.

Goldman raised US$6.5 billion in 2012 and 2013 for 1MDB, collecting US$600 million in fees in the process.

The bank has blamed the affair on rogue employees and that it did not know the money it helped raise would be diverted from the development projects it was meant for. Former Goldman partner Tim Leissner has pleaded guilty in the US to conspiring to launder money and violating foreign bribery laws. 

Goldman reached settlement with Malaysia in July to end criminal charges and claims for restitution over the losses suffered by the government in the 1MDB affair. Under the terms of the agreement, the bank would pay Malaysia US$2.5 billion upfront and guarantee the return of US$1.4 billion worth of seized assets linked to 1MDB.

In all, Goldman should pay roughly US$5 billion to settle the case with Malaysia and US agencies.

1MDB was a state investment fund launched in 2009 by then prime minister Najib Razak shortly after taking office.

Its portfolio included power plants and other energy assets in Malaysia and the Middle East, as well as real estate in Kuala Lumpur.

Concerns escalated in 2014 as 1MDB slid into an US$11-billion debt hole, intensifying public scrutiny revealed missing funds.

The US Justice Department launched a probe after claims that stolen Malaysian public money was laundered through the US financial system, and has filed suits seeking some US$1.8 billion in assets allegedly purchased with the cash.

The department said more than US$4.5 billion was stolen from 1MDB between 2009 and 2015 by the fund’s high-level officials and their associates.

Tens of millions of dollars were used in 2012 by Najib’s stepson Riza Aziz, an aspiring film producer, to fund the Hollywood film, The Wolf of Wall Street, starring Leonardo DiCaprio.

Hundreds of millions were also used, mainly by Riza and Low, to purchase high-end real estate in Beverly Hills, New York and London.

A Monet painting bought for US$35 million, a Van Gogh for US$5.5 million, a US$35-million Bombardier jet, a US$100-million stake in EMI Music Publishing, and a US$250 million yacht were also on the shopping list. – October 20, 2020.