KUALA LUMPUR, Dec 1 — The US Federal Reserve is intensifying its investigation into the Goldman Sachs investment bank over the alleged circumvention of its own guidelines in order to pursue the 1MDB account.
The bank is already under pressure to repay at least the US$600 million (RM2.5 billion) in “above average” commissions it earned from raising bonds for the state investment firm, which convicted former bankers have confessed to involve paid to government officials.
According to Bloomberg, the Fed is investigating both Goldman Sachs as a whole and individuals who played a role in the still unfolding global money laundering scandal.
The US financial regulator is said to have already interviewed the bank’s employees and determined the ease with which its legal and ethical guidelines could be subverted.
While the Fed cannot pursue criminal action, it can penalise offending banks in ways ranging from heavy fines to limiting its growth and size, as it did with Wells Fargo & Co earlier this year over internal failures.
When contacted by Bloomberg for comment on the probe, the Fed referred the agency to the US Justice Department that is investigating the criminal side of the scandal instead.
The deal has proven to be disastrous for Goldman Sachs, wiping billions off its market capitalisation as investors abandoned its stock over the methods through which it earned the US$600 million in commissions from 1MDB.
Malaysia is also preparing a civil suit in the US that will seek another US$4.5 billion in damages from Goldman Sachs over its role in the 1MDB scandal that has rocked the country and its institutions.
Former Goldman Sachs head of SEA Tim Leissner has pled guilty to criminal charges in the US related to 1MDB scandal while another former Goldman Banker, Roger Ng, is awaiting extradition to face trial there.
While Goldman Sachs has sought to blame the scandal on “rogue” former employees, revelations that its chairman, Lloyd Blankfein, led the initial pursuit of 1MDB has heightened suspicions over how far up the corporate ladder the complicity extends.