GOLDMAN SACHS CEO UPSET FORMER STAFF BROKE LAW
Solomon says it is distressing that 2 employees went around its policies
GOLDMAN Sachs chief executive officer David Solomon said yesterday he felt “horrible” that two former employees “blatantly broke the law” in their dealings with 1Malaysia Development Bhd (1MDB).
United States prosecutors filed criminal charges against the two former bankers, as well as a Malaysian financier linked to the alleged theft of billions of dollars from the fund.
An investigation into where 1MDB’s money went became the largest carried out by the US Department of Justice under its anti-kleptocracy programme, and the scandal was a reason why voters rejected Datuk Seri Najib Razak in the general election in May.
“It is distressing to see two former Goldman Sachs employees went so blatantly around our policies and so blatantly broke the law,” Solomon said in an interview with Bloomberg TV here.
“I feel horrible about the fact that people who worked at Goldman Sachs, and it doesn’t matter whether it’s a partner or it’s an entry-level employee, would go around our policies and break the law,” Solomon said.
US prosecutors announced last week that Tim Leissner, former partner for Goldman Sachs in Asia, had pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act, and agreed to forfeit US$43.7 million (RM182 million).
Roger Ng, the other charged former Goldman Sachs banker, was arrested in Malaysia and was expected to be extradited.
Reuters was not able to contact Ng’s lawyer yesterday. His lawyer did not respond to a request for comment after US prosecutors unveiled the charges last Thursday.
Goldman Sachs has also placed its former co-head of Asia investment banking, Andrea Vella, on leave over his role in the firm’s involvement with the case, pending a review of allegations, according to a person familiar with the decision.
The Wall Street bank said in a securities filing last Friday that it might face penalties from dealings with 1MDB. Asked if he could provide assurances that neither he, former Goldman Sachs chief executive officer Lloyd Blankfein or any of the senior management team suspected illegality or compliance breaches in dealings with 1MDB, Solomon said: “We take compliance and control in our firm extremely seriously, we always have. We are going to continue to cooperate with the authorities and there’s a process in place and that process will proceed.”
According to prosecutors, the bank generated about US$600 million in fees for its work with 1MDB, which included three bond offerings in 2012 and 2013 that raised US$6.5 billion.
Leissner, Ng and others received large bonuses in connection with that revenue.
Finance Minister Lim Guan Eng said in June that the government would look at the possibility of seeking claims from Goldman Sachs.
Prime Minister Tun Dr Mahathir Mohamad said Malaysia would look into why Goldman Sachs was paid around US$600 million in fees, an amount that critics said exceeded normal levels.
Goldman Sachs had maintained that the outsized fees related to the additional risks it took on — it bought the un-rated bonds while it sought investors and, in the case of the 2013 deal that raised US$2.7 billion, 1MDB wanted the funds in a hurry for a planned investment.
The government has barred Najib and his wife, Datin Seri Rosmah Mansor, from leaving the country, and the former premier faces multiple charges of corruption, money laundering and abuse of power, though he has consistently denied any wrongdoing related to 1MDB.
In another interview with Bloomberg on Tuesday, prime minister-in-waiting Datuk Seri Anwar Ibrahim said it would be “inexcusable” if Goldman Sachs was complicit in the scandal.