Goldman Sachs cuts executive bonuses after $ 2.9 billion fine

Posted on Oct 22, 2020 at 9:06 p.m.Updated Oct 22, 2020, 9:07 PM

Double shock announcement from Goldman Sachs. On Thursday, the very influential Wall Street bank for the first time in its 151-year history admitted to having pleaded guilty to the American federal justice system, being fined $ 2.9 billion in the Malaysian 1MDB scandal.

In the process, its board of directors announced to reduce by 174 million dollars the remuneration of the incriminated executives, as well as of its current and past executives, including the boss David Salomon and his predecessor, who carried the firm to its fact, Lloyd Blankfein. “We are responsible for each other’s actions. We share the benefits when our colleagues perform well for our clients. The opposite must be true too ”said David Salomon, the CEO who for two years has been breaking all the codes of Goldman Sachs.

The three executives of the investment bank at the heart of the scandal, including Tim Leissner, will pay most of the slate, or $ 76 million. The latter, who had received some 200 million dollars, has already agreed in 2019 to return 47 million dollars.

Active discussions

Five of the past leaders, from the executive chairman to the chief financial officer, as well as the former head of emerging markets are targeted for $ 67 million. One of them, specifies the bank, has already agreed to retrocede the majority of his variable compensation concerned. “The company is in active discussion with another of its senior executives, who has already received his 2011 compensation, so that he returns the majority of it as well”adds Goldman Sachs.

The American bank pushes its mea culpa further: “We believe it is appropriate that the current management, CEO, COO, CFO and current leader of Goldman Sachs International reduce their total compensation by $ 31 million in 2020”, she also said.

To plead guilty

Its supervisory board had already let this hypothesis hover in early 2019. Since then, the American bank has pleaded guilty and agreed on Thursday to pay 2.9 billion dollars to the American authorities, in addition to the 2.5 billion already granted to the Malaysian authorities.

With the help of Goldman Sachs, and at the instigation of former Malaysian Prime Minister Najib Razak – sentenced this summer to twelve years in prison at first instance in Malaysia – the Malaysian sovereign wealth fund (1 Malaysia Development Berhad, or 1MDB) had raised from 2012 to 2013, 6.5 billion dollars in capital, of which several billion had been embezzled.

The American bank then obtained an extraordinary commission of 700 million dollars, without its supervisory bodies reacting. The iconic Lloyd Blankfein himself had attended a meeting with the Malaysian authorities.

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