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Goldman Sachs' new chief executive, part-time DJ David Solomon, was probably hoping to give his image a more professional edge when he took over the management of the world's most successful investment bank. The institution's growing entanglement in a major corruption scandal is certainly a serious issue that will limit his hobbies.
The Wall Street giant's work for the Malaysian Investment Fund – known as 1MDB – was no secret, but a recent US Department of Justice investigation and subsequent lawsuits against Former Goldman bankers immediately increased pressure on Lloyd Blankfein's successor.
Goldman's legal team is preparing for a meeting with the DoJ next week, while Goldman is threatened by the alleged fraud related to a multi-billion dollar fraud at 1MDB. Goldman Sachs is under fire for two issues: his fundraising work that would then have been misused by Malaysian conspirators and officials; and for having also billed about $ 600 million (£ 460 million) for his efforts.
Last week, the United States unveiled charges against two former Goldman Sachs bankers for conspiracy to launder billions of diverted $ 1MB dollars.
The extraordinary corruption scandal in Malaysia on the part of Malaysia would have involved billions of dollars stolen from the country's sovereign wealth fund and spent on everything from Hollywood movies to purses.
Former Prime Minister Najib Razak was arrested as part of the 1MDB corruption investigation initiated by his successor, which engulfed the former leader and his companions and resulted in his loss. in the elections of May 2018.
1Malaysia Development Berhad (1MDB) is a public investment fund launched by Najib in 2009, shortly after becoming prime minister.
Its portfolio includes power plants and other energy assets in Malaysia and the Middle East, as well as real estate in Kuala Lumpur.
The fund was closely watched by Najib.
Whistleblowers say that Low Taek Jho, or "Jho Low," a shadowy, power-hungry Malaysian financier, close to Najib, but who has no official job, helped create 1MDB and made financial decisions key.
Jho has now been accused of conspiring to launder billions of dollars diverted from 1MDB by the US Department of Justice, although he is still on the run.
After the scandal broke, Najib sacked 1MDB's critics of his government, put a brake on national investigations, enacted a new strict law on security and generally toppled right.
But the number exploded in July 2015, when the Wall Street Journal released documents showing that Najib had received at least $ 681 million (US $ 518 million) in payments from his personal bank accounts.
The US Department of Justice has stepped up the pressure by filing lawsuits to seize some $ 1.7 billion of assets, which would have been purchased with stolen money of 1MDB.
The dramatic loss of the Najib elections in 2018 left him with a possibility of prosecution and imprisonment.
The election winner, Mahathir Mohamad, 93, has pledged to investigate the scandal and attempt to recover the stolen funds from 1MDB sent abroad.
Tim Leissner, a former Goldman Sachs partner in Asia, pleaded guilty to conspiring to launder money and violating the law of corrupt practices abroad by bribing Malaysian and Abu Dhabi officials and bypassing internal accounting controls. It was ordered to release $ 43.7 million as a result of these crimes. Another former Goldman banker, Roger Ng, was arrested in Malaysia on November 1 for bribery. Meanwhile, the lender reportedly put off his former co-head of the investment bank for Asia, Andrea Vella.
The media also identified Blankfein as being the executive who attended the first meetings with a major financier and middleman, Jho Low – also tasked by the DoJ but still on the run – and with Malaysian Prime Minister Najib Razak, today. Fallen. Blankfein remains an important personality of Goldman Sachs, having retained his position as president.
Some $ 4 billion has finally disappeared from 1MDB, US prosecutors claiming that hijacked money had been used by conspirators to buy luxury real estate in New York, costly works and finance the production of Hollywood movies, including The Wolf of Wall Street.
When pushed to respond to US charges, Solomon called the former Goldman bankers rogue employees who violated the lender's standards.
"It is obviously very sad to see two former Goldman Sachs employees shoving our policies so blatantly and flagrantly breaking the law," Solomon told Bloomberg TV.
"I am horrified at the thought that Goldman Sachs employees, whether it be a partner or a junior employee, are circumventing our policies and breaking the law. "
A representative of Goldman Sachs declined to comment further but told the Guardian that "the company continues to cooperate with all authorities investigating this case".
Goldman is now facing the prospect of sanctions from the DoJ, while Malaysian politicians plan to recover some of the $ 600 million.
The bank would have defended the heavy bill by citing the risks involved. He notably discussed transactions involving the purchase of unrated bonds at 1MDB in order to quickly generate cash for the fund while continuing to seek outside investors.
An agreement with a possible DoJ deal or any attempt at restitution by the Malaysian government could risk weighing on the bank's results, which have managed to exceed analyst estimates so far this year.
The US bank warned in its Q3 results this month that it was "unable to predict the outcome" of the DoJ probes.
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"Any proceedings initiated by the Ministry of Justice or other governmental or regulatory authorities could result in the imposition of fines, penalties and other significant penalties to the company," said the bank .
Anwar Ibrahim, Malaysian politician and prime minister on standby, said earlier this month that it would be inexcusable for Goldman to be complicit in "excesses and crime" while "the country and the people are suffering".
It was after the country's finance minister, Lim Guan Eng, suggested in June that the country's government would also look into whether Goldman Sachs should make a claim in the wake of the scandal.
Any details describing Goldman's involvement or complicity in fraudulent behavior would also damage his reputation, just as Wall Street marks a decade after the 2008 banking crash.
Solomon will be tested by his ability to cope with fallout, after being tipped to create a cultural change at the bank. He has already been noticed for his grip on Goldman's inner circle, having named the smallest number of new partners for decades earlier this week.
But it is only when he puts the issue of bank misconduct around 1MDB back that Solomon can refocus on his DJ decks.
