Goldman Sachs chief receives US$10m pay cut over 1MDB scandal

Goldman Sachs chief receives US$10m pay cut over 1MDB scandal

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David Solomon, chairman and CEO of Goldman Sachs, has received a US$10 million pay cut as a result of the company's involvement in the 1Malaysia Development Berhad (1MDB) corruption scandal. His total annual compensation for 2020 amounted to US$17.5 million. Although Solomon was neither involved in nor aware of the company's participation in any illicit activity at the time the firm arranged the 1MDB bond transactions, Goldman Sachs said in an US Securities Exchange Commission filing that the board views the 1MDB matter as "an institutional failure, inconsistent with the high expectations it has for the firm".

The company received US$600 million for arranging a US$6.5 billion bond fundraising for 1MDB, but most of the money was stolen. Malaysian businessman Jho Low, who is still at large, was reported to have masterminded the corruption scheme and used the proceeds to sustain his extravagant lifestyle. Former Goldman Sachs bankers Tim Leissner and Roger Ng, were charged and the company eventually pleaded guilty, paying US$3.9 billion to the Malaysian government as part of a global regulatory settlement. The Financial Times reported last year that the settlement included more than US$2 billion in new penalties.

Likewise, president and COO John Waldron and CFO Stephen Scherr each received a US$7 million pay cut, with their total annual compensation for 2020 amounting to US$18.5 million and US$15.5 million respectively. The bank said their compensation would have been higher if not for the 1MDB scandal.

Meanwhile, approximately four years after the 1MDB scandal first came to light, the Malaysian Anti-Corruption Commission fined a total of 80 individuals and entities in 2019 for misappropriating from the state fund. While former MACC head Latheefa Koya did not disclose the amount, she previously told media outlets that it could be up to 2.5 times the amount received from 1MDB. Last July, former Malaysian Prime Minister Najib Razak was found guilty on seven charges related to the 1MDB scandal. According to multiple media reports including CNN, Najib was found guilty on all counts brought against him - abuse of power, criminal breach of trust, and money laundering. He was previously alleged to have misappropriated RM1 billion from the state fund, media outlets reported.

Photo courtesy: 123RF

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