US discussing Goldman Sachs 1MDB settlement of below US$2 billion

GOLDMAN Sachs Group Inc could end up paying less than US$2 billion (RM8.32 billion) to resolve US criminal and regulatory probes over its role in raising money for scandal-ridden Malaysian investment fund 1MDB, said three people familiar with the negotiations.

The Justice Department and other federal agencies, in internal discussions held in recent weeks, have weighed seeking penalties of between US$1.5 billion and US$2 billion, the people said. That’s less than what some analysts have signalled Goldman might have to pay. While a settlement could be announced as soon as next month, the terms could change before a deal is finalised, said the people who asked not to be named in discussing private negotiations.

The bulk of the penalties would be paid to the Justice Department. Attorney General William Barr has directly immersed himself in the case, according to another person familiar with the matter. Earlier this year, Barr obtained a waiver to let him oversee the investigation, even though his former law firm, Kirkland & Ellis LLP, is representing Goldman. It’s unclear whether the Justice Department is seeking a guilty plea from the bank.

A Justice Department spokesman declined to comment, as did spokesmen for the Federal Reserve and Securities and Exchange Commission, which have been pursuing civil investigations into Goldman. The bank reiterated its previous statements that it continues to cooperate with authorities.

Goldman Sachs shares climbed as much as 3.1 per cent on the discussions, the biggest intraday gain in almost two months. The bank’s stock is up 33 per cent this year.

Reputation blow

Goldman’s involvement with 1MDB has triggered one of the biggest blows to its reputation in recent years, leading to a litany of investigations and embarrassing revelations of a former banker bribing government officials. The Wall Street firm has been eager to move past the scandal, and a US settlement of below US$2 billion would put it on track to avoid the worst-case scenario that some analysts pegged at as much as US$9 billion in global fines.

Goldman is separately negotiating a settlement with Malaysian authorities, who have in recent discussions floated much lower figures than their public stance of wanting to recover US$7.5 billion. Goldman is still privately seeking to reduce its sanctions, arguing that the crimes were committed by a rogue employee and that the bank wasn’t aware of the misconduct.

If it pays anywhere close to US$2 billion, Goldman would join other banks that have been subjected to massive US penalties this decade. In 2012, HSBC Holdings Plc set a new bar when it agreed to pay more than US$1.9 billion to settle allegations that it violated sanctions and enabled money laundering. BNP Paribas SA was then hit with the largest financial penalty ever in a US criminal case when it paid US$9 billion over sanctions violations.

In previous international corruption cases, the US has sometimes credited penalties paid to other countries for the same conduct. For example, a US$1.3 billion US settlement last year with Societe Generale SA included a credit of almost US$300 million that was paid to French authorities.

1MDB became the hub of a global corruption and embezzlement scandal in which a massive amount of cash was allegedly diverted to corrupt officials and financiers. Goldman helped the state investment fund raise cash, with the Wall Street bank making about US$600 million from US$6.5 billion in bond sales in 2012 and 2013.

Yacht, movies

Tim Leissner, a former senior Goldman banker in Southeast Asia, admitted last year to bribery and pleaded guilty to US charges that he conspired to launder money.

Money diverted from 1MDB was allegedly spent around the world, including on a super yacht, the Hollywood movie “The Wolf of Wall Street” and high-end real estate. Authorities in several countries have been working to recoup some of the missing billions and punish those involved.

There are signs that Goldman has made progress in its negotiations with US agencies and may also have a sense of how much it might pay to settle the investigations.

For instance, Goldman stopped buying back its stock in the third quarter as it began discussions with US authorities on 1MDB. Goldman later restarted its buybacks as talks with the government progressed and the firm added US$300 million to its estimate of possible legal losses, chief financial officer Stephen Scherr said on an October conference call with analysts and investors.

Compliance failures

Goldman has previously blamed Leissner for concealing his wrongdoing from the firm’s compliance efforts. Leissner has countered that the bank’s culture of secrecy led him to bypass compliance. US authorities allege that in addition to Leissner, two other bankers were aware of the scheme, including one who went on to become the bank’s top dealmaker in the region.

Earlier this year, the Fed banned Leissner and his former deputy, Roger Ng, from the banking industry. Ng faces US accusations of money laundering and bribery, and also Malaysian charges of aiding the bank’s efforts to mislead investors. – Bloomberg

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Priest tightens security after latest threats at Quinn firm – Independent.ie

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It hardly inspires confidence that the parish priest known for speaking out against this intimidation is forced to take security measures for his own protection.

Fr O’Reilly delivered a searing homily last month calling out the mafia-like “paymaster or paymasters” who funded the savage attack on Mr Lunney. In an interview with the Sunday Independent, he said: “The more you speak, the more you are at risk.”

For now, he plans to step back from the robust public commentary he has become known for, in the hope of fostering peace. “I want to get back to my normal parish work… I find that in the last month, a whole lot of things have happened. I want to take a back seat for a while. But if there is further intimidation, I intend to return to the fray.”

A second death threat to the directors of Quinn Industrial Holdings (QIH) last week – companies founded and lost by the former billionaire Sean Quinn – has finally catapulted the long-standing campaign of intimidation and violence into the lap of Government.

The threat was issued via the Irish News last Monday by a man in a balaclava reading from a statement purporting to be a “last warning” to directors to resign or face a “permanent solution”. The directors “hadn’t learned their lesson” since the attack on Mr Lunney, the man said, chillingly noting that they could have “easily killed” him if they had wanted to.

In the same week, Sinn Fein TD Martin Kenny’s car was set alight outside his home in Leitrim, the Garda station in Emyvale, Co Monaghan was set ablaze and two Monaghan hauliers were named as persons of interest in the investigation into the deaths of 39 Vietnamese people smuggled into the UK.

Garda Commissioner Drew Harris and the Minister for Justice, Charlie Flanagan, have struggled to explain why the years-long intimidation has not been stopped.

The Sunday Independent has learnt that Taoiseach Leo Varadkar privately rang John McCartin, one of five directors of QIH under threat, twice last week saying he was “appalled” at the intimidation. That the Taoiseach should open a direct line of communication with the victims of this campaign indicates that the penny has finally dropped.

For eight years, the directors of QIH and its property have been under siege. The businesses were once owned by Sean Quinn, the local former billionaire who lost control of his empire in 2011. He has repeatedly denounced the attacks on the companies, saying they are not carried out in his name. According to Mr McCartin, the failure of authorities to act – from Cavan County Council not taking down signs to gardai not making arrests – has “emboldened” those responsible and allowed for an escalation of violence and the creeping involvement of paramilitaries.

A photograph in the Irish News of the masked man bearing the latest death threat prompted a number of calls to the police confidential lines from local people claiming to recognise him, sources said. They suspect he is a dissident republican, originally from Northern Ireland but now living in Cavan, who has served jail time for possession of explosives. He was once prominent in the Real IRA. A director of QIH has also reported this man’s suspected identity to the PSNI and gardai.

The abduction and assault on Kevin Lunney bore the hallmarks of a paramilitary- style operation. He was kidnapped, tortured and had his legs broken in an attack resembling a punishment beating. The care that his attackers took to destroy a forensic trail, viciously pouring bleach over Mr Lunney before dumping him on a Cavan roadside, was also redolent of paramilitary thugs.

Drew Harris said last week that the investigation into the attack is making progress. Garda sources say several of the suspected gang members have been identified, and a van seized in Meath recently is believed to have been used by the gang in the attack.

But the directors of QIH struggle to see that progress. On Tuesday, the directors will hold their first meeting with the Garda Commissioner in Monaghan. Present will be chief executive Liam McCaffrey, chief financial officer Dara O’Reilly, non-executive director John McCartin and production director Tony Lunney. Mr Lunney’s brother Kevin, the company’s chief operating officer, will also attend if he is well enough.

“We are preparing for the meeting with the Commissioner. We will be asking for an update on the investigation, what progress has been made and why there have been no arrests six weeks after Kevin was attacked,” Tony Lunney told the Sunday Independent.

An obvious question is whether in the vacuum of any arrests, those responsible for the intimidation felt emboldened to issue a second death threat. The paramilitary theatrics surrounding its delivery suggests an element of playing to the media gallery too, and the statement even referenced newspaper articles about the attacks on the Quinn group.

John McCartin believes this is all part of the strategy: “We have had intimidation, signs and posters going up, defamation on Facebook and on social media, physical assaults, and now torture and kidnapping, and using mainstream media attention to scare away future investors.”

The directors believe the endgame of the campaign of violence is to run them, and the US investors, out, risking more than 2,000 jobs connected to the businesses and leaving the remnants of the group there for a new buyer to pick over. The Garda investigation is building on the question cui bono? Who ultimately benefits from running the directors and their investors out of town?

Sean Quinn has made no secret of wanting “his” company back. But he has repeatedly condemned the attack on Kevin Lunney as “barbaric”, acknowledging that his family would be “blamed”. He told Channel 4 News that he no hand, act or part in the attack, and had abandoned his ambitions to return to the businesses as a result of it. In his most recent statement to RTE last week, he said: “I call on those who have advanced threats to withdraw them immediately. If they feel that they are doing it in mine or my family’s name, they are badly mistaken.”

Mr Quinn is also clearly irked at Fr O’Reilly. He called to his home two weeks ago to challenge him on his now famous homily, even though the priest did not identify anyone in it.

This weekend, Mr Quinn confirmed to the Sunday Independent that he has complained to the priest’s Kilmore Diocese. He said he met the administrator, Monsignor Liam Kelly, and has written to “other people”.

He denied threatening legal action but he didn’t rule it out either. “I made no threats to anybody,” he said, in a phone call. Asked if he is considering legal action, he replied: “Well, we are where we are…”

Asked why he wrote the letter, he said: “I’m not going there but sure any fool would know why I wrote the letter.” He accused the priest of “telling lies” from the altar. “So, it’s not hard to know, anybody with any wit would know the man was off his head.”

Fr O’Reilly told the Sunday Independent this weekend that he wrote his homily in “anger” at the “awfulness of the inflicted injuries on Kevin Lunney”.

“It is not a good way to be writing something when you are angry,” he said. “I have to take that on board myself before asking anyone else to do that. I don’t want to vilify anyone. It never was my intention. I want to give more rational debate a chance, with the hope that these years of intimidation are now coming to an end.”

In the sitting room of his parish home in Ballyconnell, a large detached house clearly visible on the hill, Fr O’Reilly cited Nelson Mandela’s words about “leaving bitterness and hatred behind”.

“The most terrible walls are the walls that grow in the mind. I believe that applies to this area. Walls grow in the minds of some people that are causing great difficulty for themselves and for others. These walls are about perceived grievances, and I suppose prejudice plays a major part and they become entrenched,” he said.

“We must find ways and means of helping people to take down these walls.”

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