MDO | ALERTS

MDO | ALERTS

Goldman Sachs Agrees to Record $2.9 Billion FCPA Settlement 

■ ■ ■  November 30, 2020

Last month, the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) announced the $2.9 billion Foreign Corrupt Practices Act (FCPA) settlement enforced against The Goldman Sachs Group, Inc. (Goldman). Goldman was accused of paying more than $1.6 billion in bribes to multiple high-level foreign officials in Malaysia and Abu Dhabi from 2009-2014 to secure its role as the underwriter of over $6.5 billion in three bond deals for 1Malaysia Development Berhad (1MDB).

 

Goldman entered into a deferred prosecution agreement (DPA) with the DOJ in connection with charges of conspiracy to violate the FCPA anti-bribery provisions and violations of the anti-bribery, internal accounting controls, and books and records provisions of federal securities laws. Goldman Sachs (Malaysia) Sdn. Bhd., Goldman’s Malaysian subsidiary, pleaded guilty to a one count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA. The DOJ and SEC agreed to give partial credit for payments Goldman made in other foreign actions in Malaysia, the U.K., Singapore, and Hong Kong.

 

The DOJ and SEC concluded that although Goldman had implemented a comprehensive anti-corruption and compliance program, its internal controls were deficient because high and low-level employees were able to nonetheless engage in corrupt activities. The DOJ has alleged that Goldman ignored “significant red flags” with the Malaysia deals, including the involvement of Low Taek Jho, a Malaysian national, despite their knowledge that he “posed a significant risk”. Therefore, as part of the DPA Goldman must report on the status of its enhanced anti-corruption compliance policies for three years.

 

The Goldman resolution is the biggest FCPA case ever, far exceeding the Airbus SE’s $2.09 billion settlement in January 2020. The DOJ’s sanction was based on several considerations, including Goldman’s failure to voluntarily disclose its conduct, the nature and seriousness of the offense, the amount of the bribes, the duration of the scheme, the pervasiveness of misconduct, including the involvement of Goldman high-level employees, and the deficiencies in Goldman’s compliance program and internal controls.

 

With increasingly aggressive enforcement efforts and record-setting fines, MDO Partners encourages companies to establish strong Anti-Corruption Compliance Programs to mitigate the risk of FCPA violations. MDO Partners advises companies on global compliance programs. Our attorneys and advisors have extensive experience advising clients on the FCPA and effective Anti-Corruption Compliance Programs in over 30 countries.


About MDO Partners
 
MDO Partners is a boutique law firm that focuses on Corporate, International, and Real Estate Law, as well as Global Compliance and Business Ethics. The firm is comprised of a solid team of attorneys and advisors with more than 100 years of combined experience who are committed to the business goals and best interests of their clients. The firm delivers value-added services of the highest caliber and serves as a trusted advisor to its clients with a practical and business-savvy approach.

If you have questions or comments regarding this Alert, please contact one of the attorney's or advisor's listed below.

 

Richard Montes de Oca

Managing Partner

305.704.8452

rmontes@mdopartners.com

Claudia Herbello

Associate Counsel

305.704.8456

cherbello@mdopartners.com

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