Report: Goldman Sachs nearing deal with DOJ on 1MDB

Goldman Sachs Group Inc is believed to be in the final stages of its tussle with the US government to avoid a guilty plea over its 1MDB dealings, according to a report by Bloomberg.

It is understood that Goldman has appealed to the Department of Justice’s (DOJ) highest ranks and that a deal may be near, said the report.

Previously, prosecutors were pressing Goldman for a guilty plea after a high-ranking Goldman banker pleaded guilty in 2018 and described a secretive corporate culture that sidelined compliance staff, but Goldman has since pushed back on that narrative and secured a hearing from the nation’s top law enforcement officers.

The financial giant's defence is being led by Karen Seymour who was brought in two years ago as general counsel with a mandate to end the years-long US criminal investigation over the billions of dollars Goldman raised for 1MDB.

If Goldman escapes without a guilty plea, it will be a big victory for the bank. However, both Jake Siewert, a Goldman Sachs spokesperson and John Marzulli, a spokesman for the US attorney’s office in Brooklyn, New York, which is handling the case, declined to comment.

The bank is believed to be awaiting word from the DOJ about whether they agree with their prosecutors in Brooklyn that any deal must include a guilty plea by a subsidiary in Asia, according to a source cited by Bloomberg.

Once the DOJ renders its decision about a guilty plea, a resolution could follow quickly, including a penalty as high as US$2 billion.

Goldman has never admitted guilt in a federal investigation.

The government of former prime minister Najib Abdul Razak (above) had set up the 1MDB fund in 2009, and the DOJ estimated US$4.5 billion was misappropriated by high-level fund officials and their associates between 2009 and 2014.

Goldman has been investigated by regulators in at least 14 countries, including the US, Malaysia, Singapore and others, for its underwriting role and what it did and did not know at the time of the transactions.

The bank helped raise US$6.5 billion for the scandal-plagued 1MDB through the sale of guaranteed notes and bonds.

In November 2018, the DOJ filed criminal charges against two former Goldman Sachs bankers tied to the scandal, Tim Leissner and Roger Ng.

According to the DOJ, Goldman earned US$600 million in fees for its work with 1MDB. Leissner, Ng and others received large bonuses in connection with that revenue.

The bank has consistently tried to distance itself from the scandal, saying Leissner (below) and Ng worked to conceal their criminal activities from bank management.

In January, it was reported that the bank set aside US$1.1 billion in legal costs, with most of the sum expected to go towards 1MDB settlements.

Leissner, who pleaded guilty in August 2018, had been scheduled for sentencing this month, but that was recently moved to January 2021.

Prosecutors, who have not publicly disclosed the terms of Leissner’s bail, made the request in a sealed letter to a federal judge.

Ng, who pleaded not guilty to charges in May 2019, is set to go on trial in Brooklyn federal court early next year.

On Monday, the Kuala Lumpur High Court set Sept 4 for mention to update on the status of Ng, who is still in the United States.

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