Goldman pays $3.9B to end part of scandal

Goldman Sachs has agreed to a $3.9 billion settlement with Malaysia to put behind it one of the biggest scandals in the bank’s history that changed the course of politics in the country.

The deal stems from charges that Malaysian prosecutors filed in 2018 against several Goldman units for their role in helping to raise hundreds of millions of dollars for a sovereign wealth fund that officials were later found to be using as a personal piggy bank. The scandal led to the ouster of Malaysia’s former prime minister, Najib Razak.

The multibillion-dollar deal helps the bank close one chapter in a scandal plaguing an institution that has represented the height of power and money for more than a century. But it still faces a possible guilty plea and another multibillion-dollar fine from U.S. federal prosecutors.

In recent weeks it has sought to lower that fine and is lobbying to avoid a guilty plea. The U.S. Attorney’s Office in Brooklyn declined to comment. Talks between prosecutors and the bank are ongoing, according to a person familiar with the matter.

U.S. prosecutors contend that as much as $4.5 billion was pilfered from the sovereign wealth fund — known as 1Malaysia Development Berhad, or 1MDB — into the bank accounts of Najib, his family and his friends. Goldman Sachs helped the fund to raise $6.5 billion in 2012-13 through a series of bond sales, $2.5 billion of which authorities says was then diverted to senior officials.

Goldman Sachs, which received $600 million in payment for its work, has denied any wrongdoing.