Court: Goldman Sachs violated US anti-bribery laws

A subsidiary of Goldman Sachs pleaded guilty on Thursday and agreed to pay more than $2.9 billion in a foreign corruption probe tied to the Malaysian 1MDB sovereign wealth fund, which was looted of billions of dollars in a corruption scandal. (Oct. 22)

Video Transcript

KEN SWEET: Goldman Sachs' Malaysia subsidiary pled guilty in US court today for violating US money laundering laws and the Foreign Corrupt Practices Act, which is a law designed to keep companies from bribing foreign officials to do business in those countries. In 2009, the prime minister of Malaysia created a fund called 1Malaysia Berhad. It's often referred to as 1MDB. The fund was an economic development fund-- or at least, that's how it was sold to investors. And Goldman Sachs was the primary investment bank involved in 1MDB.

That fund ended up being a slush fund for the Malaysian prime minister and his affiliates. The fund was mostly funded by bond sales that Goldman Sachs investment bankers arranged. Those bonds brought in $600 million worth of profits for Goldman Sachs' bankers.

What's most interesting is that Goldman Sachs' executives-- David Solomon, former CEO Lloyd Blankfein, and others-- had their salaries clawed back from earlier in the year. The board of directors at Goldman Sachs felt that this was an institutional failing by Goldman Sachs.

Goldman Sachs brings in about $5 billion a quarter in profits. It varies depending on how the season goes for investment banking. This is a chunk of change, but it's not going to bankrupt Goldman Sachs. They have kept operating and have largely set aside the funds to cover this fine.