Goldman Pays Billions—And Takes Millions From Top Execs—To End 1MDB Scandal

The bank will pay nearly $3 billion and recoup $174 from executives

Goldman Sachs Group Inc. on Thursday admitted it broke U.S. corruption laws, agreed to pay billions of dollars to global regulators and financially punished its top executives, resolving one of the biggest scandals in Wall Street History.

Goldman took $174 million in compensation from executives and agreed to pay nearly $3 billion to officials in four countries to end a yearslong investigation into its dealings with a Malaysian investment fund at the heart of a global bribery ring. Its check to the U.S. government is the largest such fine ever paid.

All told, Goldman's dealings with the fund, known as 1MDB, will cost more than $5 billion in financial penalties and a reputational black eye. The fund launched a decade ago with grand plans to jump-start the Malaysian economy, but instead, prosecutors say, it became a piggy bank for government officials, investment bankers and an international cast of high-rolling hangers-on.

In New York federal court Thursday, a Goldman subsidiary pleaded guilty to conspiring to violate antibribery laws. A deal cut with authorities allows the bank itself to avoid prosecution on the same charge, which could have crippled its business and further sullied a reputation the bank has worked hard to shine up in recent years.

Brandon Garrett, a Duke University law professor who studies corporate enforcement, said it isn't clear why Goldman got as much credit for cooperating with investigators as it did.

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Article written by Liz Hoffman & Dave Michaels for the Wall Street Journal

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