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Malaysia’s 1MDB scandal cost Goldman Sachs’s CEO massive pay cut

Goldman Sachs reduced its CEO's salary in the wake of the bank's scandal with the 1Malaysia Development Berhad.
Goldman Sachs reduced its CEO's salary in the wake of the1MDB scandal.

Goldman Sachs reduced its CEO’s salary, David Solomon after the bank’s scandal with the 1Malaysia Development Berhad (1MDB).

The bank’s Sources said Solomon’s salary last year was cut to $17.5 million, from $27.5 million.

Leaked documents revealed that the bank had a role in the Malaysian bribery scandal.

1MDB Scandal

The compensation reductions also apply to John Waldron, Goldman’s president and chief operating officer and Stephen Scherr, Goldman’s finance head, who received a pay cut of $7 million. 

The documents say that “While none of Messrs. Solomon, Waldron or Scherr was involved in or aware of the firm’s participation in any illicit activity at the time the firm arranged the 1MDB bond transactions, the Board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm”. 

Last year, former Malaysian PM Najib Abdel Razzaq was sentenced to 12 years in prison on corruption charges linked to the scandal. The scandal led to the downfall of his government.

Settlement

Last December, Malaysia dropped lawsuits against Goldman Sachs after a settlement reached by mutual consent in July.

Billions were embezzled from the fund that was intended to contribute to Malaysia’s economic development. The fraudulent operations branched all over the world.

Malaysia accused Goldman Sachs of aiding the money misappropriation by organizing the issuance of bonds worth 6.5 billion dollars. At the same time, the investment bank received commissions in the operation of $600 million.

The financial group, Goldman Sachs, paid Malaysia in July $2.5 billion as part of an amicable agreement. The bank guaranteed to recover at least $1.4 billion of the misappropriated money.

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