Report: Goldman Sachs close to reaching 1MDB deal with push to avoid guilty plea

Syed Jaymal Zahiid
Never in Goldman's history has it ever admitted guilt to anything, even when it was implicated as a key player in the toxic mortgage fiasco that sparked the 2008 financial meltdown. — Reuters pic

KUALA LUMPUR, July 1 — Goldman Sachs Group Inc. is in the final stages of resolving an investigation by the US Department of Justice over its alleged role in the 1MDB financial scandal that could see the bank avoid a guilty plea, according to a Bloomberg report.

To reach the settlement, the investment bank has appealed to the Justice Department’s highest ranks, Attorney General William Barr, who began overseeing the case after obtaining a waiver because his former law firm represents Goldman.

“A deal may be near,” the US-based newswire said.

“Prosecutors were emboldened to press Goldman for a guilty plea after a high-ranking Goldman banker pleaded guilty in 2018 and described a secretive corporate culture that sidelined compliance staff, people familiar with the case said.

“Since then, Goldman has pushed back on that narrative and elevated its case to the nation’s top law enforcement officers.”

Averting a potential guilty plea is important because never in Goldman's history has it ever admitted guilt to anything, even when it was implicated as a key player in the toxic mortgage fiasco that sparked the 2008 financial meltdown.

A central player in the negotiation is Goldman’s defence lawyer, Karen Seymour.

Seymour was hired two years ago as general counsel with a mandate to end the years-long US criminal investigation over the billions of dollars Goldman raised for 1MDB.

A large portion of that money was allegedly siphoned by people connected to the country’s former prime minister, namely into the personal accounts of Low Taek Jho, or Jho Low, the alleged mastermind.

Bloomberg reported that Goldman would achieve a big victory for the bank if it escapes without a guilty plea. If not, Seymour may still be able to soften the blow by bartering over what details are included — and not included — in a statement of facts outlining Goldman’s conduct in Malaysia.

Seymour, 59, has had the experience of representing Goldman in a separate case, helping the bank reach a settlement for a case involving fraudulent marketing of mortgage investments known as Abacus a decade ago, the newswire reported.

Seymour was a partner at Sullivan & Cromwell, Goldman’s outside law firm, at the time and was dispatched to clean up the mess generated by Goldman’s fighting words.

“Ultimately, she negotiated a pact with the SEC that included a hefty US$550 million fine but no admission of wrongdoing,” the newswire said.

At the moment the bank is awaiting word from Justice Department leaders about whether they agree with their prosecutors in Brooklyn that any deal must include a guilty plea by a subsidiary in Asia, Bloomberg quoted a person familiar with the matter as saying.

A decision would clear the way for a settlement, the source added.

Goldman Sachs when contacted did not comment on the status of the negotiations.

“We are trying to resolve this matter as expeditiously as possible,” said Jake Siewert, the bank’s spokesperson.

The US attorney’s office in Brooklyn, New York, that was handling the case also declined to comment.

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