Investment bank Goldman Sachs Group Inc on Friday said it could withhold multimillion-dollar bonuses for former chief executive officer Lloyd Blankfein and other executives as a result of the 1Malaysia Development Bhd (1MDB) corruption scandal.
In a statement filed with securities regulators, the company said stock awards for senior executives could be cut depending on how pending investigations into 1MDB turn out.
The case has left the storied US banking giant with a black eye. The US Department of Justice in November last year charged two former Goldman bankers for their alleged roles in misappropriating 1MDB funds, one of the largest financial frauds ever.
US prosecutors also said an unnamed “high-ranking executive,” which a source later identified as Blankfein, met with the scam’s alleged mastermind Low Taek Jho (劉特佐) in 2009, the year 1MDB was created.
Goldman helped 1MDB to issue US$6.5 billion in bonds, but US and Malaysian authorities say that about US$3 billion was stolen.
The compensation committee on Goldman’s board would have the “flexibility to reduce the size of the award … if it is later determined that the results of the 1MDB proceedings” would have affected decisions on year-end compensation, the statement said.
Blankfein, who stepped down as chief executive at the end of September and left the board in December, received US$20.5 million in annual compensation for last year, down from US$24 million the year before.
The company is to withhold his long-term performance bonuses initially granted in 2011, which the Wall Street Journal reported on Friday is now worth about US$14 million.
Current chief executive officer David Solomon received US$23 million last year, up from US$21 million in 2017.
In December, Solomon defended the bank, rejecting much of the criticism directed its way as unfair.
“I cannot stress enough how integrity is a cornerstone of our culture,” Solomon said in a year-end message to employees.
He said the bank was working with authorities to bring to justice the culprits behind the scandal, which has rocked the Malaysian political scene.
Goldman last week reported better-than-expected profits, despite the legal costs related to the scandal. Net revenues were US$36.6 billion for last year, with pretax earnings of US$12.5 billion, up 12 percent from 2017 and the highest since 2010.
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