OCTOBER 25 – Goldman Sachs Group Inc's Malaysian subsidiary pleaded guilty on Thursday to US Department of Justice charges and agreed to pay US$2.9 billion (RM12 billion) to various authorities for its involvement in the 1MDB case.
Between 2010-2015, money was systematically appropriated from 1MDB that was supposed to fund Malaysia's development.
This money found its way into the hands of various Malaysian politicians
Goldman Sachs, one of the world's largest investment banks, was accused of facilitating the theft of the funds by organizing bonds to increase the amount of funds in 1MDB and potentially aiding officials to move money out of the fund and into private bank accounts.
The scandal effectively brought down the government of former Malaysian Prime Minister Najib Razak and cases related to 1MDB have been prosecuted in the USA.
By pleading guilty and agreeing to pay a substantial amount of money, Goldman Sachs is clearly looking to draw a line under the scandal and move on with its profitable banking endeavours.
The question is, should it be allowed to do so? Goldman Sachs has basically admitted to robbing or aiding and abetting the robbing of a developing nation.
This is a company with perhaps US$1 trillion of assets and US$150 billion of available cash. A US$2.9 billion payout is rather negligible in that context.
The 1MDB issue is a serious matter in itself but ultimately it is just a drop in the ocean of Asian corruption.
And what is clear from the scandal is that supposedly respectable US and European banks and institutions were intimately involved in this endless cash extraction.
It is very unlikely this is the only instance where officials at a major investment bank helped local officials shift billions from the people to private accounts -- it is just one of the few instances where someone got caught and faced some justice.
Basically there is an entire system set up to enable the transfer of wealth from the people of Asia into Western and other intermediary banks and ultimately into markets, funds and real estate in developed nations.
Only this explains why so much of mineral-rich Indonesia remains poor -- their money has literally gone elsewhere.
Of course the corruption of local officials and governments is well known. What isn’t publicised enough is the extent to which this corruption is aided and abetted by supposedly respectable corporations.
Tragically this sort of systematic looting is not a new phenomenon.
It has been going on from the very beginning of the colonial enterprise -- from the time the Dutch and British East India companies first started to acquire territory, untold and undue amounts of wealth has moved from Asia to the West.
And this really is the issue; if Goldman Sachs can admit wrongdoing and pay for its misdeeds, when do we start the conversation about all the other money that has been siphoned out of the hands of Asian citizens and into the hands of Western institutions and their allies over the years?
As part of the 1MDB case, senior Goldman Sach officials have been asked to return part of their salaries as these too were paid from profits that were basically illegally extracted.
But honestly over the last few years, decades and centuries how many salaries have been paid from illegally extracted profits?
This money is still largely in the West and still being held by institutions who profit from it.
From the dollars extracted by the Whita Rajahs of Borneo to extractive tin mines and plantations. There is a galaxy of abuses to consider in Malaysia alone in that context.
Goldman Sachs’ US$2.9 billion is a start but it's not even the tiniest tip of the iceberg.
* This is the personal opinion of the columnist.
