After 1MDB scandal, Goldman Sachs CEO says reflecting on hiring ‘criminal’ Tim Leissner

Goldman Sachs CEO David Solomon says the firm is trying to understand how it ended up ‘hiring a criminal’, referring to Tim Leissner who once headed its Asian investment banking business. ― Reuters pic
Goldman Sachs CEO David Solomon says the firm is trying to understand how it ended up ‘hiring a criminal’, referring to Tim Leissner who once headed its Asian investment banking business. ― Reuters pic

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KUALA LUMPUR, April 30 ― The CEO of scandal-riddled Goldman Sachs David Solomon is keen to move on from the 1Malaysia Development Berhad (1MDB) saga and has admitted that the US investment bank needs to overhaul its internal oversight practices after the “criminal” involvement of one of its partners.

In an interview with CNBC last night, Solomon said the firm is trying to understand how it ended up “hiring a criminal”, referring to Tim Leissner who once headed its Asian investment banking business.

“We are spending a lot of time being reflective and really thinking about how it was that we wound up having somebody we hired at the firm, promoted at the firm, became a partner with the firm and turned out to be a criminal,” Solomon told the US broadcaster.

“We own that, that's on us. ... We are working as diligently as we can to put it behind us and move on and stay focused on our clients and businesses,” he was quoted saying.

Leissner pled guilty to bribery charges in the US last August for his role in helping raise funds through bond offerings for 1MDB.

The scandal is the worst to hit Goldman since the financial crisis as the fund is the subject of corruption and money-laundering investigations in at least six countries.

The US investment bank has said that its role in 1MDB is the result of a few bad employees, rather than something broader about firm or its culture, and Leissner was called “the biggest ever threat” to Goldman’s reputation.

“We committed a significant amount of capital in a part of the world where the distribution process isn't clean and simple. In those transactions, one was sold very quickly; one took almost a year to distribute. The risk is real,” Solomon said in the interview.

“If you actually look at other transactions in other developed economies where you are committing sizable capital like that, the risk premium for making that commitment then structuring, rating and distributing the paper, this wasn't out of the ordinary,” he added.

The bank's shares were battered last year amid the scandal, falling more than 34 per cent in 2018. They have partially recovered this year, climbing more than 23 per cent.

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