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Goldman Sachs Settles 1MDB Case for USD 3BN

By GAN Integrity (Updated )

Welcome to This Week In Compliance: GAN’s weekly news roundup, where we curate the latest stories on compliance and anti-corruption to keep you informed. This week, Goldman Sachs settles the 1MDB case with U.S. authorities for a record-breaking fine of USD 3BN. Read the full story and more news below:

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Goldman Sachs Settles 1MDB Case for USD 3BN:

Goldman Sachs Group Inc. pleaded guilty to corruption allegations in the 1MDB case with U.S. authorities, settling to pay a record-breaking fine of nearly USD 3BN. The bank admitted to violating the U.S. FCPA's anti-bribery provisions in a corruption scheme where the bank paid over USD 1.6BN in bribes to Malaysian and Abu Dhabi public officials in exchange for securing its role as an intermediary to help raise funds for the 1Malaysia Development Bhd fund (1MDB). Goldman earned the fund USD 6.5BN by orchestrating three lucrative bond deals between 2012 and 2013, securing a commission of USD 600M. In 2015, it was made public that the fund had been subject to large-scale embezzlement by Malaysian public officials, and by Jho Low, an adviser to the fund who is now a fugitive. Malaysia's former PM was charged for abuse of power in July of 2020 after USD 700M was found in a bank account linked to him. Executives of the bank, including Timm Lessner, the banks' former Southeast Asia Chairman, and Ng Chong Hwa, Goldman's Malaysia director, have also been indicted for corruption charges. As a consequence of the indictment, the bank announced it would take millions in compensation from the departed executives, and would also claw back bonuses on the bank's current directors, including David Solomon, current CEO, amounting to  USD 174M in cuts.


U.S. Justice Department Files Google Antitrust Lawsuit:

In an enforcement action described by experts as ''the most significant antitrust case in America in two decades'', the U.S. Department of Justice (DOJ) filed an antitrust lawsuit against Alphabet's Google on Tuesday, October 20th. The DOJ is accusing Google, which controls 90% of the American online search market, of abusing its market power by using exclusive billion-dollar deals to dominate the search engine market. Reportedly, Google struck deals with companies such as Verizon and Apple to pre-load Google's search tool into mobile devices, ''effectively locking out competition''. Google issued a public statement calling the lawsuit ''deeply flawed'' and argued that users consciously choose to use Google over other search engines, and not because they couldn’t find other alternatives. The lawsuit, which will likely take years to appear in court, is allegedly the first out of many more legal actions to be brought forward by other U.S. authorities.

Germany Issues Arrest Warrants for Panama Papers Firm Founders:

German authorities issued international arrest warrants against Juergen Mossack and Ramon Fonseca, the founders of the law firm behind the tax haven Panama Papers data leak Mossack-Fonseca. The 2016 leak revealed that Mossack-Fonseca had helped thousands of wealthy clients establish shell-companies to evade taxes in multiple jurisdictions. The arrest warrant, which was issued for suspicions of tax evasion and association with criminals, will be applicable if any of the founders enter the European Union. Investigators expect that Mossack, who is a dual Panamanian-German citizen, surrenders himself to the authorities to negotiate a reduced sentence and avoid U.S. charges.

Warren Buffet's Berkshire to Pay USD 4.1 Million for Sanctions Violations:

A subsidiary of Warren Buffet’s Berkshire Hathaway was fined  USD 4.1M over U.S. sanctions violations in Iraq. According to the Office of Assets Control (OFAC), the Turkish branch knowingly sold metal cutting tools and inserts to two Turkish firms that supplied those items to Iranian distributors who were connected to the Iranian government. Despite “repeated communications and policies” on sanctions, the subsidiary engaged with entities that were later found to fall under the definition of the “Iranian government”, and used fraudulent means to mask the transactions. U.S. companies are prohibited from doing business with the Iranian government and any related entity. Berkshire voluntarily reported the breaches to U.S. authorities after an employee blew the whistle internally in 2016. OFAC credited Berkshire for collaborating with the investigators and for taking remedial measures by firing the involved individuals.

SEC Gives USD 800,000 to Whistleblower:

The U.S. Securities and Exchange Commission (SEC) announced a USD 800,000 award to a whistleblower that helped the agency open an investigation that led to two successful enforcement actions. The Chief of the SEC's Office on Whistleblowing said that the whistleblower provided detailed information on securities violations. This award marks the 107th award given by the SEC's whistleblowing program since its establishment in 2012.   


French Ex-President Faces New Conspiracy Charges:

Former French President Nicholas Sarkozy is facing new charges of conspiracy over the funding of his 2007 presidential campaign. As part of a long-running investigation, Sarkozy, who served as president from 2007 to 2012, faces accusations of receiving millions of euros from Libyan ruler Muammar Gaddafi for his campaign in exchange for political leverage. In 2014, Gaddafi allegedly stated that Sarkozy reached out to his regime for financial support in 2007, without giving out any details on the specific amounts. Sarkozy, who is also facing trial for previous indictments on embezzlement and passive corruption, denied all allegations via Twitter.

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