Goldman Sachs (NYSE:GS) is making another hefty payout for its role in the 1MDB scandal. On Thursday, the Department of Justice (DOJ) and the company announced that Goldman had agreed to pay more than $2.9 billion for its participation in the notorious Malaysian financial controversy.
That penalty is a component of a "coordinated resolution," in the DOJ's words, with financial and law enforcement authorities in several countries, including the U.S., the U.K., and Singapore.
1MDB (or 1Malaysia Development Berhad) is an economic development fund created and operated by the Government of Malaysia that is currently insolvent. During its heyday, 1MDB veered from traditional economic-support initiatives in the country into more controversial and dubious investments.
The DOJ characterized the U.S. investment bank's involvement thusly: "Over a period of five years, Goldman Sachs participated in a sweeping international corruption scheme, conspiring to avail itself of more than $1.6 billion in bribes to multiple high-level government officials across several countries so that the company could reap hundreds of millions of dollars in fees, all to the detriment of the people of Malaysia and the reputation of American financial institutions operating abroad."
Goldman published a memorandum from CEO David Solomon stating: "This has been a long process and we are pleased to be putting these matters behind us. But, we are not putting the lessons learned from this experience behind us."
Solomon will take a pay cut, as will numerous top managers at the company. Even former Goldman officials will have some of their compensation reduced.
This is not the first time Goldman is paying for its participation in the scandal. In July, it agreed to a separate settlement of $3.9 billion with the Malaysian government.