SINGAPORE - Goldman Sachs Singapore will pay US$122 million (S$165 million) to the Singapore Government for its role in the 1Malaysia Development Berhad (1MDB) bond offerings corruption scandal.
The penalty is believed to be the largest-ever imposed here, far exceeding the $13.3 million slapped on BSI Bank, whose Singapore unit was shut down in 2016 for its role in the scandal.
The fine is on top of the nearly US$3 billion that parent Goldman Sachs has agreed to pay after its Malaysia unit said it will plead guilty to violating foreign bribery laws, drawing a line under a saga that has dogged the investment banking giant for years.
Singapore's Commercial Affairs Department (CAD) has also served Goldman Sachs Singapore with a 36-month conditional warning, in lieu of prosecution, for three counts of corruption offences punishable under Section 5(b)(i) of the Prevention of Corruption Act, Chapter 241.
Meanwhile the Monetary Authority of Singapore (MAS) has directed the Singapore unit of Goldman Sachs to appoint an independent external party to conduct a review of its remedial measures, it said in a joint statement with the Attorney-General's Chambers and CAD early on Friday morning (Oct 23).
MAS in a separate statement said that it has issued a lifetime ban against Kevin Michael Swampillai, the former head of the wealth management services at BSI Bank's Singapore branch.
The lifetime prohibition orders (POs) were issued at the conclusion of an investigation conducted by the MAS and took effect on Oct 22, it said.
In its statement, MAS said that from 2012 to 2013, Mr Swampillai and his then-subordinate, Yeo Jiawei, had assisted 1MDB to restructure several of its joint venture interests. In that time, they channelled about US$5 million as a portion of the fund management fees - "secret profits" - to an entity beneficially owned by Mr Swampillai. This was done without BSI Bank's knowledge and authorisation.
MAS said Mr Swampillai also deliberately made misrepresentations to 1MDB's auditors in a bid to "improperly influence" them. He misrepresented that the assets held by PetroSaudi Oil Services, one of 1MDB's investments, were liquid in nature and mostly cash, even though he knew that the assets comprised two drill ships.
The 1MDB scandal dates to the government of former Malaysian Prime Minister Najib Razak, which set up the 1MDB fund in 2009. According to US prosecutors, Goldman paid more than US$1.6 billion in bribes to foreign officials in Malaysia and Abu Dhabi between 2002 and 2014 to win 1MDB business.
Singapore's case against Goldman stems from CAD's investigation of Goldman Singapore's former managing directors, Tim Leissner and Roger Ng, over three bond offerings underwritten by Goldman Sachs International for 1MDB subsidiaries.
In August 2018, Leissner pleaded guilty in a US District Court to one count for conspiracy to violate the Foreign Corrupt Practices Act and one count for conspiracy to commit money laundering. Following his guilty plea, MAS in December 2018 increased the 10-year PO against him to a lifetime ban.
Roger Ng is in the US, where he has been charged for conspiring to launder money and bribe government officials in Malaysia and Abu Dhabi. Under an extradition deal, Ng, a Malaysian national, will be returned to Malaysia after the completion of his US trial, which is due to begin next year.
In all, Goldman's penalties will exceed US$5 billion globally, equivalent to about two-thirds of a year's earnings.
Goldman will pay a US$2.3 billion fine to the US Justice Department and other regulators, and a further US$600 million in disgorgement of ill-gotten gains to settle the US probe and avoid a criminal conviction.
This is in addition to the US$3.9 billion that Goldman has agreed to pay Malaysia in exchange for dropping all criminal charges against the bank. Hong Kong on Thursday also fined Goldman’s Asia unit US$350 million.
In a Oct 22 memorandum addressed to all the employees of the bank globally, Goldman Sachs chairman and CEO David Solomon said; "As you have all seen, the US Department of Justice, along with regulators in the US, UK, Singapore and Hong Kong, announced settlements with Goldman Sachs that resolve the government and regulatory investigations of the 1MDB matter."
"This has been a long process and we are pleased to be putting these matters behind us. But, we are not putting the lessons learned from this experience behind us," he said.
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