Goldman Sachs CEO apologises to Malaysia over 1MDB

NEW YORK (Jan 17): The head of Goldman Sachs on Wednesday apologised to Malaysia for a Goldman partner's role in the 1MDB scandal even as he defended the firm as a whole.

Goldman Chief Executive David Solomon reiterated during an earnings conference call that the investment bank was cooperating with authorities on the probe of the Malaysian sovereign wealth fund as he expressed regret over a scandal that has roiled the Asian country.

In November, the Justice Department announced that former Goldman partner Tim Leissner had pleaded guilty to violating US anti-bribery and money laundering laws and agreed to pay US$43.7 million in restitution.

"It's very clear that the people of Malaysia were defrauded by many individuals including the highest members of the prior government," Solomon said. "Per Leissner's role in that fraud, we apologise for the Malaysian people."

But Solomon also defended the bank as a whole, saying it had been misled by Leissner and senior officials in the Malaysian government about the role of a key intermediary in the scandal, Low Taek Jho.

Goldman helped arrange US$6.5 billion in bonds for 1MDB. Kuala Lampur has filed criminal charges against Goldman and two former employees for alleged theft.

A Justice Department indictment of Low Taek Jho and Ng Chong Hwa, another ex-Goldman banker, that identified Goldman as "Financial Institution #1" said the firm's business culture at times emphasized dealmaking "ahead of the proper operation of its compliance functions."

Solomon said employees at Goldman were "extremely angry" about Leissner's role but that morale was good on the whole due to the bank's strong financial performance. 

Goldman has suffered a "reputation dent" tied to the scandal, Solomon acknowledged, but added that the effect on clients had been "de minimus."