SINGAPORE: Goldman Sachs Singapore will pay US$122 million (S$165 million) to the Singapore Government for its role in bond offerings related to 1MDB, the authorities said on Friday (Oct 23).
The payment comes after Goldman Sachs entered a deferred prosecution agreement (DPA) on Thursday with the US Department of Justice over the 1MDB scandal. Under terms of the deal, Goldman agreed to pay a US$2.3 billion fine for breaking anti-bribery laws and to disgorge US$600 million of ill-gotten gains.
The Commercial Affairs Department (CAD) has served Goldman Sachs Singapore a 36-month conditional warning in lieu of prosecution for three counts of corruption, said the authority in a joint statement with the Attorney-General’s Chambers (AGC) and the Monetary Authority of Singapore (MAS).
Under the conditional warning, Goldman Sachs Singapore will pay US$122 million to the Singapore Government within five working days from the date of the conditional warning, cooperate with CAD in its 1MDB-related investigations and comply with the terms of the deferred prosecution agreement.
Goldman Sachs Singapore will also disgorge US$61 million to the Malaysian authorities; the fee represents what it earned from the 1MDB bond offerings.
“The total amount paid or to be paid by Goldman Sachs Singapore under the conditional warning is therefore US$183 million,” said the statement.
The scandal dates to the government of former Malaysian prime minister Najib Razak, which set up the 1MDB fund in 2009.
The bank was investigated for its role in raising US$6.5 billion in three bond sales between 2012 and 2013 for the Malaysian government's sovereign wealth fund.
The US Justice Department has said more than US$4.5 billion was stolen from 1MDB by high-level officials at the fund and their associates between 2009 and 2015 to pay for real estate, art and other luxury items, with the help of the Goldman bankers.
The Singapore authorities said in their statement on Friday that CAD had investigated Goldman Sachs Singapore and two of its former managing directors Mr Tim Leissner and Mr Ng Chong Hwa, who is also known as Roger Ng, in relation to the bond offerings underwritten by Goldman Sachs International for the subsidiaries of 1MDB.
In 2018, the Justice Department filed criminal charges against the Leissner and Ng.
At his trial, Leissner pleaded guilty to conspiring with Malaysian financier Low Taek Jho and Ng to use some of the 1MDB bond proceeds to pay bribes and kickbacks to Malaysian and Abu Dhabi officials.
Ng is awaiting trial while Low, also known as Jho Low, remains a fugitive.
INDEPENDENT THIRD PARTY REVIEW
Friday's statement also said that MAS has directed Goldman Sachs Singapore to appoint an independent external third party to review measures by the local office to remediate deficiencies uncovered during an inspection in 2016 on its risk governance and controls in relation to the 1MDB bond offerings.
Following the inspection in 2017, Goldman Sachs Singapore was required to undertake various remedial measures to address the identities lapse. The firm’s internal audit or the remedial measures was completed earlier this year in June.
READ: Former BSI banker banned for life by MAS over US$5 million in ‘secret profits’ linked to 1MDB scandal
“In view of the seriousness of the control deficiencies identified in MAS’ inspection and the corruption offences that underpin the DPA and conditional warning, MAS has directed Goldman Sachs Singapore to appoint an external party to conduct an independent and rigorous verification of the effectiveness and sustainability of the remedial measures,” the statement said.
“MAS will also closely monitor the implementation of any additional measures to be taken by GSSP as part of the DPA.”