The US Department of Justice (DOJ) has charged the Goldman Sachs Group, its Malaysian subsidiary and executives for conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). The charges relate to the 1MDB scandal.
1MDB was an investment fund established by the Malaysia Government to fund economic development.
The DOJ announced on Friday that the charges stem from Goldman Sachs’ central role in massive global scheme to loot billions of dollars from the government run investment scheme, and the subsequent use of those funds to pay US$1.6 billion in bribes to senior government officials around the world.
Goldman Sachs Malaysia has entered a plea of “guilty” and agreed to pay a penalty of US$2.3 billion – the largest monetary penalty in history for the corporate criminal foreign bribery resolution. The Bank has also agreed to disgorge the $600 million in fees that it charged for advising 1MDB in relation to issuing and selling bonds on the international market. The Goldman Sachs Group has entered into a conditional Deferred Prosecution Agreement for 3 years. One of the executives, a former Managing Director of the bank and Chairman of the South East Asian operation has also pleaded guilty. The other executive awaits trial beginning in March 2021.
The DOJ has said that the charges demonstrate that Department of Justice will not allow companies and individuals to engage in fraud and corruption in foreign jurisdictions. The criminal prosecutions follow extensive civil proceedings and forfeiture orders for the illicit gains from the scheme.
The FCPA is a US law that prohibits bribery of foreign officials and intends to deter corruption and abuses of power worldwide. The FCPA contains policies for governing the actions of publicly traded companies, their directors, officers, shareholders, agents, and employees. This includes working through third parties such as consultants and partners in a joint venture with the company—meaning that the use of proxies to execute a bribe will not shield the company or individual from culpability. The law prohibits the giving of anything of value to foreign government officials in order to retain or obtain business. Providing a benefit to an official resulting in an unfair competitive advantage, such as not having to comply with safety regulations, may also violate the act.
The DOJ has described foreign bribery as criminal conduct which causes significant harm, is antithetical to good government, injures free markets and undermines the rule of law. It has also said that persons engaged in foreign bribery will not escape justice because the criminal conduct extends across international enforcement jurisdictions. The DOJ has announced that the outcomes are the result of extensive international cooperation with partners across the world to investigate and punish fraud and corruption wherever it occurs.
Similar laws exist in the Australia under the Commonwealth Criminal Code which provides that corporations will be liable for bribery of foreign officials by its employees, agents or officers who are found to have bribed a foreign official, if that person was acting within the actual or apparent scope of their authority, and the corporation expressly, tacitly or impliedly authorised or permitted the conduct.
You can read the announcement from the United States Department of Justice by clicking here.
Disclaimer
The information contained in this publication is of a general nature and is for informational purposes only. It not intended or to be regarded as providing legal or technical advice of any kind, nor as expressing opinions on the specific circumstances of any particular case, individual or entity.
Whilst Obsequium endeavours to provide accurate and timely information, we do not guarantee the accuracy of information contained in this publication, or that it will continue to be accurate in the future.
You should obtain legal or technical advice before taking action on an issue dealt with in this publication.
