February 2, 2019
Malaysian Scandal Could Cost Executives From Goldman Sachs Millions

Top Goldman Sachs officials could end up paying millions of dollars in compensation for their role in the ongoing Malaysian corruption scandal. Senior executives, including former Goldman Sachs CEO Lloyd Blankfein, could see huge chunks of their financial compensation disappear depending on the outcome of the investigation.

According to CNN Business, the U.S. Justice Department alleges that a massive conspiracy resulted in $4.5 billion being misappropriated from 1Malaysia Development Berhad, Malaysia's sovereign wealth fund. Nearly 50 percent of the money that Goldman Sachs had raised in funding ended up gone, used instead to fund kickbacks and bribes, as well as pay for assorted jewelry and other luxury items.

The question then becomes: What was Goldman Sach's involvement in this scandal? So far, Tim Leissner, former Southeast Asia chairman for Goldman Sachs, has pled guilty to conspiring to steal money from the Malaysian government. Malaysia went on to file criminal charges against the bank in December 2018.

Goldman Sachs, for its part, has categorically denied any involvement with the scandal. The company maintains that a small group of unethical employees are entirely responsible and even lied to compliance and legal teams to maintain the facade.

"While we understand the anger and skepticism, we do not believe that the criticism directed at us accurately reflects who we were then or who we are now," Solomon said in a statement.

Blankfein, along with former executives Mike Evans and Michael Sherwood, saw their expected payouts from a long-term stock award plan frozen, as the bank has decided to hold off on payments until the scandal has been resolved.

And that's not the only way the scandal is impacting the higher-ups at Goldman Sachs. A provision has been approved by the board of directors at Goldman Sachs that gives them the power to reduce as well as enable a clawback clause on stock awards. This would allow them to reclaim money or stock options already given out to the former and current executive in the company -- including current CEO David Solomon.

Solomon was given $23 million in 2018, after succeeding Blankfein as CEO of the company. Blankfein received $20,500,000 in total compensation for his time with Goldman Sachs. Over $15 million of Solomon's earnings were in stock rewards, and could, therefore, be subject to the new provision. Blankfein, meanwhile, has over $14 million in stocks, which would also be viable for clawbacks by the company.

The investigation into the Malaysia scandal is currently ongoing; the US Justice Department continues to investigate Goldman Sach's involvement in the situation.