Goldman Sachs chief executive, David Solomon, was hit with a $10m (£7.3m) pay cut after the bank’s involvement in Malaysia’s 1MDB scandal.
Solomon’s salary for the year fell from $27.5m in 2019 down to £17.5m – a reduction of 36%.
Following an investigation, it was found that Goldman Sachs bankers paid over $1.6bn in bribes to foreign officials in Malaysia and Abu Dhabi in order to win the 1MDB fund business. The bank has said its involvement in the scandal was an “institutional failure”.
“The board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm,” said the bank in a statement.
Over $6.5bn was raised by Goldman Sachs for 1MDB – most of which was stolen.
Whilst Solomon’s pay has been cut, bank executives stressed that he was not aware of the fraudulent activity that was taking place. The bank said that Solomon was not “involved in or aware of the firm’s participation in any illicit activity at the time… the board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm”.
The 1MDB has been investigated for years by regulators in the US, UK, Singapore, Malaysia and Hong Kong. It cost Goldman Sachs over $5bn, however, despite the costs the bank was still able to enjoy a strong year. The bank had an annual revenue of $44.6bn in 2020 – the highest level since 2009.
Chief operating officer of Goldman Sachs, John Waldron, is also having his pay cut. His salary for 2020 will fall $6m to $18.5m.
Brian Rabbitt, acting assistant attorney general of the Justice Department’s criminal division, commented at the time: “That harm was borne principally and in the first instance by the people of Malaysia, who saw a fund created to benefit them… instead turned into a piggybank for corrupt public officials and their cronies.”