Monday, April 22, 2019

Top Executives at Goldman Sachs Could Lose $40 Million Due to Malaysian Scandal

Top executives at Goldman Sachs International, a financial services company could lose up to $40 million due to the 1Malaysia Development Berhad (1MDB) scandal of 2018. The company has threatened to withhold the compensation which was meant to be paid to these executives depending on the outcome of the legal case against them, according to a media report on February 4.

Goldman Sachs Threatens to Withhold Compensation

Goldman Sachs International has revealed that compensation which was meant to be paid to some reputable members of the company could be reduced or withheld entirely. The latter was attributed to the IMBD scandal against the multinational investment bank which has been going on since 2018. Therefore, those that may be affected are the Lloyd Blankfein, former CEO and Chairman and David Soloman, the current  CEO.

Reportedly, if these threats are put into action, Blankfein could lose the chance of receiving $18.5 million in annual variable compensation as well as restricted stock units (RSU) worth $14.245 million. Soloman, on the other hand, may have just kissed goodbye the $15.4 million in RSU which is meant to be paid as part of his 2018’s compensation.

Goldman Sachs International Faces a Lawsuit

More light into the event that may have led to the company’s decision reveals that they are currently facing a lawsuit. The 1Malaysia Development Berhad (1MDB), a Malaysian state investment fund had sought the services of Goldman Sachs some years ago. Between 2012 and 2013, the financial services company was able to raise $6.5 billion in form of bonds for 1MDB.

However, 1MDB alleged that the data did not add up and as such investigations were carried out by the country’s Securities Commission who said Goldman Sachs has tampered with $2.7 billion. The US Justice Department also claimed that the stolen money is up to $4.5 billion and a part has been squandered on artworks, bribery, amongst others.

Goldman Sachs Former Chairman in Asia Subsidiary Pleads Guilty

Whether these claims are true or false, someone from Goldman Sachs has already pleaded guilty to the crime and that is Tim Leissner, the former chairman of Goldman’s subsidiary in Asia. Leissner also said that the company was aware of the fraudulent acts. The financial services company, on the other hand, has refuted the claims and said that they were misled by corrupt employees.

Nevertheless, Tommy Thomas, Malaysia’s attorney general in December filed charges against the multinational investment bank and two other divisions that are based in Asia. Names that have also been soiled in the crime are Tim Leissner, Jasmine Lo, and  Jho Low, who is reportedly on the run.

According to the Malaysian authorities, the allegations against the company has violated the securities law. It could also attract criminal fines of $2.7 billion which is similar to what was squandered from the bond proceeds. Moreover, a fee of $600 million may be included and those accused could face up to a maximum of 10 years in prison.

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