Goldman Sachs' 1MDB Criminal Case Dismissed After Fulfilling $2.9 Billion Penalties

In a significant legal closure, a U.S. judge on Monday officially concluded the criminal proceedings against Goldman Sachs regarding its involvement with the Malaysian investment fund, 1MDB. This follows the Wall Street giant's compliance with the terms outlined in a three-year deferred prosecution agreement, which concluded in October.

Reuters reported that Chief Judge Margo Brodie of the federal court in Brooklyn dismissed the bribery conspiracy charge after the bank met its obligations, including a hefty $2.9 billion in penalties.

Goldman Sachs was pivotal in raising $6.5 billion through bond sales for 1MDB, a fund established by former Malaysian Prime Minister Najib Razak and financier Jho Low to spur economic development. However, the initiative became one of the biggest financial scandals in recent history as authorities from the U.S. and Malaysia revealed that around $4.5 billion was illicitly diverted from the fund.

According to investigations, these funds were misappropriated through offshore bank accounts and shell companies, with Low now labeled a fugitive.

Goldman's Stance and Legal Consequences

Throughout the legal proceedings, Goldman Sachs maintained that it was misled by 1MDB officials and the then-Malaysian government figures regarding using the bond proceeds. The scandal tainted the bank's reputation and led to the criminal charging of two former Goldman bankers involved in the transactions.

Tim Leissner, who spearheaded Goldman's business in Southeast Asia, pleaded guilty and is awaiting sentencing, while Roger Ng faced a conviction leading to a 10-year prison term. Ng, the former head of investment banking for Goldman, was later transported to Malaysia to support ongoing investigations there.

Beyond Legal Reparations

MarketScreener noted that the dismissal of charges against Goldman Sachs marks an end to the bank's direct legal battles in the U.S. regarding the 1MDB saga. Nonetheless, the overarching narrative of financial misconduct tied to the case continues to stir discussions on corporate governance, legal accountability, and ethical banking practices on a global scale.

Photo: Goldman Sachs Newsroom