NEW YORK: Goldman Sachs Group Inc on Friday lowered its previously stated quarterly earnings as the bank set aside more money to pay for its settlement with the Malaysian government over the multi-billion dollar 1MDB scandal.
Goldman lowered its net earnings applicable to common shareholders to US$197 mil (RM825.13 mil) from US$2.25 bil, in a filing published on Friday.
The revised earnings reflect a larger-than-previously-announced provision for legal and regulatory costs due to a US$3.9 bil settlement the bank reached with the Malaysian government.
The bank said it set aside US$2.96 bil in the second quarter for legal and regulatory costs, up from the US$945 mil Goldman said it set aside on July 15 in its second quarter earnings announcement.
The bank’s stock was down 0.1% in pre-market trading.
On July 24, Goldman agreed to pay the Malaysian government US$2.5 bil cash and return at least US$1.4 bil in proceeds from assets linked to sovereign wealth fund 1Malaysia Development Bhd (1MDB), in exchange for Malaysia dropping all criminal charges against the bank.
US and Malaysian authorities estimate that US$4.5 bil was stolen from the fund between 2009 and 2014. Goldman helped the fund raise US$6.5 bil in two bond offerings, earning itself US$600 mil in fees, according to the US Department of Justice (DOJ).
Goldman faces a separate investigation by the DOJ, which is reportedly looking at whether the bank violated the US Foreign Corrupt Practices Act, which bars US companies from paying foreign government officials for help in getting or keeping business.
While it remains unclear if the bank’s reserves could cover another settlement, the DOJ has pledged in recent years to consider parallel settlements when calculating corporate penalties.
A source said in December that Goldman was in talks with US officials to possibly pay up to US$2 bil to resolve the investigation. – Aug 7, 2020, Reuters
