In 2009, the prime minister of Malaysia created a fund called 1Malaysia Berhad.
"Goldman Sachs today accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB", Acting Assistant Attorney General Brian Rabbitt said in a statement.
The major USA bank Goldman Sachs accepts a billion-euro fine for its role in the corruption and money laundering scandal involving the Malaysian sovereign wealth fund 1MDB.
While Goldman's Malaysian unit pleaded guilty in a USA court for breaking corruption laws, the parent company pleaded not guilty and agreed to a deferred prosecution.
These included the fact that the amount raised far exceeded the actual needs of 1MDB, and the sovereign wealth fund's willingness to pay high fees and repeated emphasis on confidentiality and speed of execution, the SFC said.
In particular, Goldman Sachs Asia, the compliance and control hub of Goldman Sachs in the region and based in Hong Kong, had significant involvement in the origination, approval, execution and sales process of the three 1MDB bond offerings.
The regulator notes that the securities industry is of fundamental importance to Hong Kong's role as an global financial centre.
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Goldman says it will withhold or get back some US$174 million in compensation awarded to its executives.
Goldman Sachs itself has entered into a deferred prosecution agreement, which will be announced during a noon news conference at the Justice Department. Because of this laxity, bonds of 1MDB were allowed to proceed despite several red flags being raised around the offerings, and they were not scrutinized properly.
According to CNN, the various settlements leave Goldman with a total bill for the scandal of $5.1 billion, according to a company filing, while it could still face civil penalties.
SFC chief executive officer Ashley Alder stresses that the enforcement action the regulator has taken is the result of a rigorous, independent investigation.
The subsidiary pleaded guilty to violating anti-bribery provisions of the Foreign Corrupt Practices Act, admitting it contributed to the misappropriation of $2.6 billion in a bribery scheme that spread from Southeast Asia to the United States and has been a costly and lasting black eye for the prominent investment bank. The bank was involved in the issuance of $6.5 billion in bonds from the fund and is said to have charged excessive fees. On the stock exchange, however, the billion-euro fine was calmly received, and Goldman Sachs shares hardly reacted at all.
Goldman Sachs has also faced regulatory penalties from other governments over the 1MDB scandal.