Home \ Newsroom \ Today's Action By Federal Reserve Against Senior Goldman Sachs Executive for Connection to 1MDB Crimes Should Be Just the Beginning

Today's Action By Federal Reserve Against Senior Goldman Sachs Executive for Connection to 1MDB Crimes Should Be Just the Beginning

FOR IMMEDIATE RELEASE

Tuesday, February 4, 2020

Contact:  Christopher Elliott, 202-618-6433, press@bettermarkets.com

Washington, D.C.  –  Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement regarding the Federal Reserve’s permanent bar against a senior executive of Goldman Sachs for his actions in connection with 1MDB:

“The Department of Justice labeled a Goldman Sachs senior executive ‘co-conspirator #4’ in November of 2018 when it charged two other Goldman partners with numerous crimes in connection with the worldwide illegal activities of the Malaysian 1MDB fund.  Goldman Sachs merely put that senior executive on leave until today when the Federal Reserve permanently barred him from the banking industry ‘for his role in Goldman’s financing of a defrauded Malaysian sovereign wealth fund.’  Now, more than a year after the Justice Department identified him as a co-conspirator, the senior executive reportedly left the firm. 

“Goldman has claimed total innocence regarding all matters related to 1MDB and has tried to portray the two partners charged with crimes as ‘rogues’ who acted alone.  However, that would have required them to be the greatest criminal masterminds in history who fooled everyone at Goldman Sachs and circumvented all of the firm’s risk, legal, compliance, audit, management and other so-called state-of-the-art controls and systems.  Today’s action makes that defense appear even more implausible.

“These three partners are merely the tip of the proverbial iceberg of ‘more than 30 Goldman Sachs executives’ who were involved with 1MDB, including the then-CEO, the then-co-head of investment banking and now CEO, and the prior President and COO. Additionally, while most of the reporting has been about the three bond offerings over ten months in 2012-2013 totaling $6.5 billion and the reported astonishingly high $600 million fee Goldman pocketed for those offerings, those activities were only one part of the firm’s five-year relationship with 1MDB from 2009 to 2014, when there were innumerable red flags suggesting improper, illegal or criminal conduct by 1MDB.”

“The multi-billion-dollar global criminal enterprise referred to as ‘1MDB’ was not merely a financial crime, but one that corrupted and looted an entire country.  It also enabled an allegedly corrupt prime minister to get reelected (just barely reportedly using the proceeds of the Goldman offerings as election bribes), the brutal suppression of the opposition, and the murder of at least three people, including the butchering of a prosecutor investigating these matters

“If lawbreaking on Wall Street is to be punished and deterred, then the banks and their executives must suffer meaningful penalties, including bars, fines, disqualifications, criminal charges and other appropriate sanctions.  Slap-on-the-wrist settlements where Wall Street banks get to use shareholders’ money to pay fines that effectively purchase ‘get-out-of-jail’ free cards must end. 

“Today’s action by the Federal Reserve against a senior office is a good start for personal accountability, but, unless more action is taken by the Department of Justice in particular and much more information is publicly disclosed, the corrosive double standard of injustice undermining the public’s faith and confidence in government will continue.  The country simply cannot afford for Wall Street’s biggest banks to remain too-big-to-jail in addition to too-big-to-regulate, too-big-to-manage and too-big-to-fail.”

The full Report on Goldman Sachs’ involvement with the activities of 1MDB and the many questions it raises can be read here.

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

Share This Article: