Goldman Sachs fined US$350m in Hong Kong over 1MDB

A sign displayed in the reception of Goldman Sachs in Sydney May 18, 2016. — Reuters pic
A sign displayed in the reception of Goldman Sachs in Sydney May 18, 2016. — Reuters pic

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HONG KONG, Oct 22 — Global financial titan Goldman Sachs was fined US$350 million (RM1.4 billion) by Hong Kong’s securities watchdog today for its role in the massive 1MDB Malaysian bribery scandal, the latest in a growing list of global punishments the firm faces.

Goldman Sachs Asia — the Hong Kong-based compliance and control hub of the company — showed “serious lapses and deficiencies in its management supervisory, risk, compliance and anti-money laundering controls”, Hong Kong’s Securities and Futures Commission said.

The regulator added that Goldman had accepted the SFC’s findings, leading to an early resolution of the disciplinary action.

The SFC said Goldman’s failures contributed to the misappropriation of US$2.6 billion from the US$6.5 billion that 1MDB raised in three bond offerings in 2012 and 2013.

“Goldman Sachs Asia fell far short of the standards expected of a licensed intermediary in the 1MDB case and suffered not only reputational damage from its own failures, but also brought the securities industry into disrepute,” Thomas Atkinson, the SFC’s Executive Director of Enforcement, said.

Goldman Sachs Asia received US$210 million — or 37 per cent of the total revenue—from the 1MDB bond offerings, which was the largest share among the various Goldman Sachs entities.  

The SFC investigation concluded that Goldman Sachs Asia allowed the offerings to proceed despite numerous red flags not being properly scrutinised and answered.

The fraud involved former Malaysian prime minister Datuk Seri Najib Razak and his cronies, and the cash plundered from state coffers bankrolled a global spending spree.

It was used to buy everything from artwork to real estate to a superyacht. — AFP

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