Goldman Sachs is set to pay a fine of just under $2 billion and admit guilt to the US government to resolve an investigation into its so-called 1MDB scandal, The Wall Street Journal reported on Thursday.
The bank and the Department of Justice are nearing an agreement on the settlement, which would involve Goldman admitting it ignored warning signs as billions of dollars were stolen from 1Malaysia Development Berhad, according to The Journal.
US authorities and the bank have discussed a settlement in which a Goldman business in Asia would plead guilty to violating US bribery laws and Goldman would hire an independent party to oversee and recommend compliance-policy changes, The Journal reported.
The discussions are ongoing, and a deal could be reached in early 2020, The Journal said.
Goldman raised $6.5 billion for the government fund and netted roughly $600 million in fees through the deal. US authorities said that much of the money raised was stolen by a Malaysian government adviser, Jho Low, and two Goldman bankers, and that the firm did little to curb the actions.
On December 6, Bloomberg first reported the possibility of a $2 billion settlement.
Low in October agreed to hand over more than $700 million in assets to the US government but remains a fugitive and hasn’t admitted guilt, according to The Journal.
One of the Goldman bankers, Tim Leissner, pleaded guilty to stealing more than $200 million from the government fund and is scheduled to be sentenced in 2020, while the other, Roger Ng, pleaded not guilty in New York and faces charges in Malaysia, The Journal reported.
Goldman began selling billions of dollars’ worth of bonds to 1MDB in 2012. The sales were meant to fund power-plant purchases by the government fund.
A nearly $2 billion fine would be one of the largest issued to a major bank since the post-financial-crisis settlements. The firm’s board reserves the right to decrease CEO compensation to pay the fee, potentially putting David Solomon’s salary on the chopping block, The Journal said. Former CEO Lloyd Blankfein could also see his pay docked because of the scandal.
It’s unclear whether Goldman would receive any credit from the Justice Department if it were to pay fines levied by Malaysia, which has filed criminal charges against Goldman and 17 bank employees in its Asia offices, The Journal reported.
Goldman closed at $230.45 per share on Wednesday, up about 38% year-to-date.