The 1Malaysia Development Berhad scandal (1MDB scandal) is an ongoing political scandal in Malaysia. In 2015, Malaysia’s then-Prime Minister Najib Razak was accused of embezzling $700 million from 1Malaysia Development Berhad and putting the funds in his personal bank accounts. Goldman Sachs was involved in three bond sales between 2012 and 2013 which brought in $6.5 billion 1MDB.
The underwriting of thee bond sales earned Goldman Sachs more than $600 million in fees, but the embezzlement scandal brought it government investigations in more than a dozen countries.
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In October Goldman Sachs made a deal to settle its part in Malaysia’s 1MDB corruption scandal and agreed to pay almost $3 billion in penalties. So now Goldman wants the people who were involved in the bond sales, including Gary Cohn, to return the commissions which they earned.
Cohn was President and Co-Chief Operating Officer of Goldman at the time the deals were made. Former Goldman Sachs CEOs David Solomon Lloyd Blankfein have already made good on their reimbursements. The firm will also take $31 million from Chief Executive Officer David Solomon and his three top deputies’ pay in 2020.
Lloyd Blankfein said about refunding his share of the money, “It goes with the responsibility of leadership to accept some consequences for things that go wrong on your watch.”
But Gary Cohn seems to be balking at giving back the estimated $10 million that he earned.
Gary Cohn left Goldman Sachs at the start of 2017 to serve as Director of the National Economic Council and chief economic advisor to President Donald Trump. He remained in the Trump Administration until April 2018.
There were many ethics questions raised when Gary Cohn left Goldman for the White House because of his lucrative severance package. Cohn walked away with a total of $284 million. This included $65 million in cash and stock tied to Goldman Sachs’ future performance, as well as about $220 million of Goldman equity he already held or was waiting to mature.