Goldman Sachs announced Thursday it will cut pay for executives amid a scandal involving a Malaysian government-run development company.
The New York-based investment bank and financial services company reached a $2.9 billion settlement with the US Justice Department and regulators in the United Kingdom, Singapore and Hong Kong, amid a probe of the 1Malaysia Development Berhad (1MDB) scandal.
CEO David Solomon said “certain former employees broke the law, lied to our colleagues and circumvented firm controls,” but he added the scandal does not relieve him or anyone else at the company of responsibility.
The board said it has “the right to adjust certain compensation to past and current members of senior management when more information about 1MDB matters became available.”
As a result, the bank decided to take action, in which $76 million already paid to three employees will be returned.
Also, five former senior executive officers, including former CEO Lloyd Blankfein, are required to forfeit all or the majority of performance awards between 2011-2013.
Solomon and senior officers will see their overall compensation reduced by $31 million for 2020, the board said.
“These clawbacks, forfeitures and compensation reductions will total approximately $174 million in the aggregate,” it added.
The 1MDB scandal came to light when Malaysia’s then-Prime Minister Najib Razak in 2015 was accused of channeling $700 million from the company’s fund.
The US investigation shows more than $4.5 billion was diverted from the fund and used to purchase mansions, yachts and help fund “The Wolf Of Wall Street,” a Hollywood movie that ironically depicts corruption and fraud in the financial industry.
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