Goldman Sachs Group Inc. reportedly may be on the hook for as much as $5 billion for its role in a Malaysian bribery scandal — twice previous estimates of a worst-case scenario.
Goldman Sachs (GS) will likely be forced to forfeit $600 million it made in fees, pay at least $1.2 billion in fines to the SEC, and at least another $2.7 billion in money returned to Malaysia, the New York Post reported.
The Post said the rest would likely be doled out to other agencies investigating the bank, citing an interview with Peter Henning, a former criminal prosecutor at the Justice Department, which was published in a Thursday research report from Wells Fargo.
Goldman Sachs has consistently denied wrongdoing over its dealings with scandal-linked state fund 1MDB.
Malaysian prosecutors last month filed charges against Goldman Sachs in connection with its role as underwriter and arranger of three bond sales that raised $6.5 billion for 1Malaysia Development Berhad (1MDB), the first criminal action against the U.S. bank over the scandal, Reuters reported.
Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to the bank about the proceeds of the bond sales.
In addition to the bonds’ total value, Goldman Sachs should also return $1 billion to cover $600 million in fees paid to the bank and bond coupons that were “higher than the market rate”, the FT quoted Malaysian Finance Minister Lim Guan Eng as saying.
The three 10-year bonds carried coupons ranging from 4.4 percent to 5.99 percent.
Earelier this week, a Malaysian court refused bail to former Goldman Sachs banker Roger Ng, pending his extradition to the United States where he faces charges related to suspected money laundering of funds siphoned off from 1MDB, Reuters reported.
Ng has been detained in Kuala Lumpur since Nov. 1, shortly after the U.S. Department of Justice announced charges against him, another Goldman Sachs official Tim Leissner, and Malaysian financier Low Taek Jho over the alleged theft of billions of dollars from 1MDB.
Leissner, a former partner for Goldman Sachs in Asia, pleaded guilty to conspiring to launder money and violate the Foreign Corrupt Practices Act, while Low has denied wrongdoing and remains at large.
Malaysian prosecutors have filed separate criminal charges against the three, as well as an application to extradite Ng to the United States.