Last week, Goldman Sachs Group Inc CEO David Solomon, in an interview at the New Economic Forum in Singapore, admitted that former employees of the bank “blatantly broke the law” in relation to the 1Malaysia Development Bhd (1MDB) scandal.
So far, two former senior Goldman bankers — Tim Leissner and Roger Ng — have been indicted by the US Department of Justice (DoJ) for working with Malaysian Low Taek Jho, or Jho Low, to launder billions from the sovereign wealth fund.
A third unidentified Goldman official was mentioned in court documents for conspiring with Leissner, Ng and Low, and had knowledge that bribes were being paid. Then, it was reported last week that Goldman had placed Andrea Vella, a former co-head of investment banking in Asia, on leave.
Reports also emerged last week that Goldman’s former CEO Lloyd Blankfein is the senior executive identified in court papers as having been in a meeting hosted by former prime minister Datuk Seri Najib Razak in New York in 2009, which was also attended by Low.
Goldman has maintained it was not aware that some of its Asia-based bankers were deceiving the bank or that Low was behind the deals involving 1MDB.
It is a well-known fact that Goldman made outsized fees on the 1MDB bonds that it arranged.
Goldman’s revenue from the 1MDB deals amounted to about 7.7% of the face value of the securities while other banks collected average fees of 1.32% in 2013 for comparable deals, according to Bloomberg data.
With Solomon’s admission and Leissner’s guilty plea to charges of money laundering and bribery in the 1MDB scandal, perhaps Goldman should consider returning the fees it had earned instead of waiting for action to be taken by the DoJ or the Malaysian government.