Singapore fines Goldman Sachs $165 million over 1MDB corruption scandal

SINGAPORE – Goldman Sachs Singapore will pay US$122 million (S$165 million) to the Singapore Government for its role in the 1Malaysia Development Berhad (1MDB) bond offerings corruption scandal.

The penalty is believed to be the largest-ever imposed here, far exceeding the $13.3 million slapped on BSI Bank, whose Singapore unit was shut down in 2016 for its role in the scandal.

The fine is on top of the US$3 billion that parent Goldman Sachs, the global investment banking giant, has agreed to pay after its Malaysia unit said it will plead guilty to violating foreign bribery laws, drawing a line under a saga that has dogged the bank for years.

Singapore’s Commercial Affairs Department (CAD) has also served Goldman Sachs Singapore with a 36-month conditional warning, in lieu of prosecution, for three counts of corruption offences punishable under Section 5(b)(i) of the Prevention of Corruption Act, Chapter 241.

Meanwhile the Monetary Authority of Singapore (MAS) has directed the Singapore unit of Goldman Sachs to appoint an independent external party to conduct a review of its remedial measures, it said in a joint statement with the Attorney-General’s Chambers and CAD early on Friday morning (Oct 23).

MAS in a separate statement said that it has issued a lifetime ban against Kevin Michael Swampillai, the former head of the wealth management services at BSI Bank’s Singapore branch.

The lifetime prohibition orders (POs) were issued at the conclusion of an investigation conducted by the MAS and took effect on Oct 22, it said.

In all, Goldman’s penalties will exceed US$5 billion globally.  It will pay a US$2.3 billion fine to the US Justice Department and other regulators, and a further US$600 million in disgorgement of ill-gotten gains to settle the US probe and avoid a criminal conviction.

This is in addition to the US$3.9 billion that Goldman has agreed to pay Malaysia in exchange for dropping all criminal charges against the bank. Hong Kong on Thursday also fined Goldman’s Asia unit US$350 million.

In a Oct 22 memorandum addressed to all the employees of the bank globally, Goldman Sachs chairman and CEO David Solomon said; “As you have all seen, the US Department of Justice, along with regulators in the US, UK, Singapore and Hong Kong, announced settlements with Goldman Sachs that resolve the government and regulatory investigations of the 1MDB matter.”

“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,” he said.

The scandal dates to the government of former Malaysian Prime Minister Najib Razak, which set up the 1MDB fund in 2009. According to US prosecutors, Goldman paid more than US$1.6 billion in bribes to foreign officials in Malaysia and Abu Dhabi between 2002 and 2014 to win 1MDB business.

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