Article: Goldman Sachs ‘close to $2bn settlement’ over 1MDB scandal

Article - Media, Publications

Goldman Sachs ‘close to $2bn settlement’ over 1MDB scandal

Kalyeena Makortoff, 19 December 2019

Goldman Sachs is close to reaching a settlement of nearly $2bn (£1.5bn) with the US Department of Justice over the 1MDB corruption scandal, according to a report.

The Wall Street bank is said to be formulating a deal under which its Asian subsidiary, rather than the parent company, would pay a multibillion-dollar fine and admit guilt for having allegedly turned a blind eye while $4.5bn was looted from its client, Malaysia’s sovereign wealth fund, 1MDB.

The deal would also involve oversight from an independent monitor that would help reform the bank’s compliance rules, the Wall Street Journal reported.

The settlement package would end the US justice department’s investigation into Goldman Sachs’ role as an underwriter and arranger of bond sales for the wealth fund, totalling $6.5bn.

About $4.5bn was allegedly looted from 1MDB in a fraud said to have involved the former Malaysian prime minister Najib Razak, the Malaysian financier Jho Low, and his associates. The funds were allegedly used to buy everything from yachts to artwork, and fund the production of Hollywood films including The Wolf of Wall Street.

Razak is facing criminal charges in Malaysia but has pleaded not guilty. Low is facing charges in both Malaysia and the US, and has also denied wrongdoing.

Goldman Sachs, meanwhile, said it was lied to about how the proceeds of the three bond sales it conducted on the fund’s behalf between 2012 and 2013 were used.

In November, the Malaysian prime minister, Mahathir Mohamad, confirmed he had rejected a separate offer from Goldman Sachs worth less than $2bn. “We are not satisfied with that amount so we are still talking to them … If they respond reasonably, we might not insist on getting that $7.5bn,” he told the FT.

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Article: UK banks fined €1bn by EU for rigging foreign exchange market

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UK banks fined €1bn by EU for rigging foreign exchange market

Kalyeena Makortoff, 16 May 2019

Five banks including Barclays and Royal Bank of Scotland have been fined more than €1bn (£875m) by the European Union for rigging the multitrillion-dollar foreign exchange market.

The European commission said the banks, which also include Citigroup, JP Morgan and MUFG (Mitsubishi UFJ Financial Group), formed two cartels to manipulate the spot foreign exchange market for 11 currencies, including the US dollar, the euro and the pound.

The commission’s penalty adds to the £1.3bn in fines imposed by the UK Financial Conduct Authority in 2014 over the same case. While the FCA’s penalty focused on the lender’s breach of regulations, the EU’s fine deals with how their behaviour dampened competition.

“These cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets,” the European competition commissioner, Margrethe Vestager, said in a statement.

The banking industry has been hit with billions in fines worldwide over the last decade for rigging benchmarks used in many day-to-day financial transactions, and are now at risk of private lawsuits.

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