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Malaysia seeks $7.5B in reparations from Goldman Sachs
- cbg0 8y agoMost likely they'll settle for a lower sum if they want to continue to operate there, otherwise it might be simpler and cheaper to just pull out of Malaysia.
- blackstrips 8y agoI take it GS will just walk away. It might not be worth to pay that much to operate in Malaysia. Not to mention, people could just start a separate company if they absolutely need to do business in Malaysia.
- mpweiher 8y agoI don't think it's quite as simple as that: https://en.wikipedia.org/wiki/Enforcement_of_foreign_judgments https://en.wikipedia.org/wiki/Enforcement_of_foreign_judgmen...
- pjc50 8y agoThey don't get to walk away from criminal prosecution.
- blackstrips 8y agoThey are prosecuting the company though, not the staff. If GS refuses to pay, the best they can do is ban them from the country. What else can they do, seriously?
- onetimemanytime 8y agoThey can seize their CEO's jet while fueling in, say, France, or a GS building in China or whatever. Their life will be miserable, they'd have to navigate hundreds of jurisdictions and they are "bounty hunter" types that take these cases after judgments. But fraud is fraud, Malaysia can sue them in good, old, USA. Who thinks that GS, the paragon of integrity, behaved correctly, raise their hands. Right, zero hands.
- drawkbox 8y agoWhen "too big to fail" goes to the head and gets too boisterous and risky. Goldman Sachs did have to pay 5.1B for the Great Recession scams [1]. As long as GS can keep the "financial innovation" in Malaysia they will probably pay it after trying to reduce it, if they can't gain from it further in the future they won't. [1] http://fortune.com/2016/04/11/goldman-sachs-doj-settlement/ http://fortune.com/2016/04/11/goldman-sachs-doj-settlement/
- twelvechairs 8y agoTake it up at a political level I expect
- curiousgal 8y agoHoping the current administration would side with foreigners against one of its own banks is rather optimistic.
- ReptileMan 8y agoPutin and China has shown that they don't mind getting their hands dirty in foreign countries. Not see why any government could not hire some private operators if they are pissed enough to deliver the to Kuala Lumpur
- denzil_correa 8y agoSingapore and US are also investigating GS. There will most likely not be a "walk away". > Singapore’s widened probe opens a potential new battle front for Goldman less than a week after Malaysia filed the first criminal charges against the firm over a relationship that spawned one of the biggest scandals in its history. Singapore is coordinating closely with the U.S. Justice Department, which is also investigating Goldman and has filed criminal charges against two former senior bankers at the firm, the people said. https://www.bloomberg.com/news/articles/2018-12-21/singapore-said-to-expand-1mdb-criminal-probe-to-include-goldman https://www.bloomberg.com/news/articles/2018-12-21/singapore...
- blackstrips 8y agoThey might get nailed in the US but I don’t think Malaysia is going to see any of that 7.5B they are asking for.
- wbl 8y agoThey very well may. SDNY isn't going to let customers get screwed when settling with a bank.
- gg82 8y agoProbably not a bad thing for Malaysia if GS didn't operate in their country.
- gcb0 8y agowhat would be most scary is if they for some reason pay the fine to continue to operate there.
- johnchristopher 8y agoIsn't scary now if we entertain the idea that Malaysia wouldn't had done that if they had nothing to gain in some form or another from it ?
- erikpukinskis 8y agoThe allegation is that people in the Malaysian government criminally contracted GS. Of course the criminals profited. There’s no reason to assume Malaysia did.
- theosp 8y agoAnyone can shed light on Goldman's chances to get fair trial from the Malaysian courts? 7.5b is more than 10 times the fee collected by Goldman, why stop there?
- baybal2 8y ago10 fold punishments for proceeds of crime are not that rare, why stop there?
- Theodores 8y ago10x was legit in Babylon, circa 1754 BC, with the oldest written law concerning this: Ex. Law #265: "If a herdsman, to whose care cattle or sheep have been entrusted, be guilty of fraud and make false returns of the natural increase, or sell them for money, then shall he be convicted and pay the owner ten times the loss. https://en.wikipedia.org/wiki/Code_of_Hammurabi https://en.wikipedia.org/wiki/Code_of_Hammurabi Innocent until proven guilty was also in the Code of Hammurabi, not sure about the 'eye for an eye' bit or the treatment of slaves though. Nonetheless the precedent of 10x is there.
- baybal2 8y agoI'm surprised that somebody caught that line on a forum like HN :)
- chucksmash 8y agoThe eye for an eye bit was in there[1], but apparently only for men of the same class: > 196. If a superior man should blind the eye of another superior man, they shall blind his eye. > 198. If he should blind the eye [...] of a commoner, he shall weigh and deliver 60 shekels of silver. > 199. If he should blind the eye of a slave of a superior man [...], he shall weigh and deliver one half of the slave's value (in silver). [1]: From page 106 of "Sapiens: A Brief History of Humankind" which I was just coincidentally reading on the bus and would def recommend.
- 8y ago
- jarym 8y agoThe commenters saying GS could just withdraw from Malaysia to sidestep any repercussions are mistaken. First, US prosecutors are also investigating this (and ironically so is the Federal Reserve). Now US banks might get soft glove treatment in their home country but so far the American authorities have shown some teeth in this scandal. Second, GS executives are personally named in law suits. Malaysia has foreign assistance treaties in other countries where GS operates so that'd be sticky. Finally, the reputation damage from GS withdrawing from a country to avoid a lawsuit would be hugely damaging.
- blackstrips 8y agoGS already has a rotten reputation. I don’t think they care. As for the executives, they will probably hide behind limited liability. Getting the US to hand them over will not be easy.
- ReptileMan 8y agoA life contained only to the US is still miserable for the jet set spoiled. There is good chance they will leave US eventually and be Huaweied to Malaysia.
- deleted 8y ago[deleted]
- berbec 8y agoHas "Huaweied" entered our common lexicon already?
- m0zg 8y agoAs much as I dislike GS, I find their interpretation of the story to be far more believable. US government is a paragon of honesty and virtue compared to a lot of foreign governments. Stealing government money is the main goal of those who "serve" in those governments, with the actual job description coming in a distant second or third. GS should have known this would backfire, it's not like they didn't know the money would immediately disappear into the pockets of government officials. They probably counted on those officials not being quite so brazen as to turn around and sue GS.
- ReptileMan 8y agoIt is not the same officials. It is the new administration that is trying to claw back the money.
- taherchhabra 8y agoMalaysia was a single party democracy since it's independence, the probability of new party coming into power was very very low since all the democratic institutions like election commission, judiciary were almost destroyed by the previous regime, so based on this GS would have done their risk/reward calculation. But this May, another party came to power and currently the previous prime Minister and lot of officials are charged for corruption in 1MDB.
- n-gatedotcom 8y agoYou should make a parent comment out of this because this puts the whole thing in a new light
- drharby 8y agoI did not know that their was a changing of the guard. That explains more
- sct202 8y agoI read the Billion Dollar Whale book about the scandal and there are a lot of references to western/global financial companies sending up red flags about 1MDB for years and years, but then some companies (or parts) would turn their head for a contract. Goldman Sachs private banking wouldn't give Jho Low (the apparent mastermind behind it all) a private banking account b/c they thought he was going to launder money through it. 1MDB fired one of the Big 4 auditors every year, because their books were shady. Giant investment firms like Goldman Sachs do their own due diligence before entering in any deals. They did several deals with 1MDB over the years, and the corruption should have been obvious earlier if they actually cared to check for it.
- jijji 8y agoits damages not "reparations", inflammatory no?
- known 8y agoGS is offering $1.8 billion “Their figure is $1.8 billion. Ours is $7.5 billion,” Lim said.
- onetimemanytime 8y agoso they'll pay around $4 Billion. The funny part is that people involved in the scam will probably keep their long-ago-issued bonuses. It serves everyone (but the shareholders) right...scam, make money and have the company pay 8 years later.
- theosp 8y agoAs far as I understand it, he refers to Goldman's maximum assumed losses from all the litigations they are involved in, not just 1mdb. So, no, gs are offering nothing at the moment. From Goldman's q3 report: 'As of the date hereof, the firm has estimated the upper end of the range of reasonably possible aggregate loss for such matters and for any other matters described below where management has been able to estimate a range of reasonably possible aggregate loss to be approximately $1.8 billion in excess of the aggregate reserves for such matters.'
- Firebrand 8y ago1MDB is the most bizarre scandals I’ve ever heard. A 27-year-old convinces the Prime Minister of Malaysia to let him manage country’s sovereign wealth fund, and then he proceeds to fritter almost $2 billion away throwing multi-million dollar parties and funding the Wolf of Wall Street. How did he get away with all of it for so long?
- arcanus 8y ago> How did he get away with all of it for so long? Corruption. He fritter'ed a great deal of this money to precisely the same Prime Minister who selected him. This wasn't unique, either. This sort of corruption is much more pervasive than most people believe. In China many of the top party officials are billionaires. Vladimir Putin is widely believed to have massively enriched himself during his reign. Frankly, the biggest surprise is that the corruption in this case was caught.
- stevehawk 8y ago"massively enriched" is a bit of an understatement. He's believed to be one of the wealthiest people in the world and it's why Obama put those sanctions on him and his buddies.
- wnevets 8y agoHe's been robbing his country blind to make him and his allies extremely rich.
- sifoobar 8y agoSource? As opposed to US politicians like the Bushes, Clintons and Obamas? Or any of the countless corrupt puppet dictators that the US installed around the world? Listen, I know they're pushing really hard for a war right now; but unless you're right up there at the top of the pyramid, war is hell. The only thing that will ever get us out of this hole is truth, and truth starts with not spreading BS.
- gaius 8y agoIn China many of the top party officials are billionaires. Vladimir Putin is widely believed to have massively enriched himself during his reign. Even in the US many politicians are far, far wealthier than their official salaries would suggest is plausible. Update: By the downvoting I know that you all know I mean the Clintons.
- onetimemanytime 8y ago>>Update: By the downvoting I know that you all know I mean the Clintons. Putin or a Chinese Politburo member can get as much a Clintons ever made (all public--books, speech fees) by calling /blackmailing an oligarch or an exec of their big corps. In one shot. You simply do not exist unless the state allows you to in those countries. Over there, every project has a corruption tax added to it and it goes to the top officials. Now think of that when it comes to hundred of billion projects a year.
- seanmcdirmid 8y agoChinese too officials are billionaires, American top officials are millionaires at best unless they have money coming in before. You can only make so much on speaking fees and book royalties, while red families like Xi’s own and control significant portions of the Chinese economy. Just reporting on such issues is why most western newspapers have been blocked. They don’t even bother trying to refute it, because princeling dominance of the economy an open dirty secret. It also puts better into perspective how the economy is managed in favor of their own interests.
- deleted 8y ago[deleted]
- withhighprod 8y agoChinese officials are not at billionaires level, millionaires at most. It’ll be a huge risk to their political life if they and their families possess billions. It’s very likely they could control multiple billionaires though
- 8y ago
- darawk 8y agoAm currently reading the book about this scandal "Billion Dollar Whale". Am about 1/3 of the way through it, but thus far i'd put the entirety of the blame here on the Malaysian prime minister, Jho Low, and the willfully incompetent executives hired to stage-manage the 1MDB fund. I don't see any reason to blame GS given what I know so far, though that may change as I make my way through the book.
- samstave 8y agoId blame GS because they arent idiots and would have been fully aware it was fraud, thus are accomplisses and complicit.
- lancewiggs 8y agoKeep reading. GS’s internal controls failed.
- brown9-2 8y agoYou should get further than 1/3rd into the book before you comment on the very subject the book addresses.
- OliverJones 8y agoIn case we forget: Here's Matt Taibbi's epic, and fact-checked, rant against that investment bank. https://www.rollingstone.com/politics/politics-news/the-great-american-bubble-machine-195229/ https://www.rollingstone.com/politics/politics-news/the-grea... Taibbi's lede? "The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. "
- robk 8y agoI've no intent on defending Goldman but taibbi is an idealogue not a journalist. He belongs in a commentary page not given credit as a journalist
- rayiner 8y agoAlso a piece of trash human: https://www.chicagoreader.com/Bleader/archives/2017/10/27/twenty-years-ago-in-moscow-matt-taibbi-was-a-misogynist-asshole-and-possibly-worse https://www.chicagoreader.com/Bleader/archives/2017/10/27/tw...
- AndyMcConachie 8y agoThey wrote that as fiction. https://twitter.com/onlxn/status/923966695554785280/photo/1 https://twitter.com/onlxn/status/923966695554785280/photo/1
- tptacek 8y agoOr, to paraphrase the tweet you're citing more accurately, they wrote it "as fiction".
- anigbrowl 8y ago'I was obviously joking' is the go-to defense of people who are acutely embarrassed. I've lost count of the number of times I've seen that excuse trotted out. As I always say when someone tries this in person 'if only one of us is laughing it wasn't a joke.'
- buyx 8y agoConcerned South Africans fought Bell Pottinger, a UK PR firm that was known for spreading nastiness around the world; driving it to bankruptcy, after it tried to destabilise the country, as party of a programme of looting being carried out by its clients in South Africa.[1] KPMG has suffered extensive reputational damage for similar reasons, and its international parent had to intervene to contain the contagion. Malaysia is taking on Goldman Sachs, going where faint-hearted and fearful first-world regulators fear to tread. Perhaps we'll see more justice coming from unexpected sources. [1] I don't think Bell Pottinger's erstwhile members have stopped interfering with South Africa but that's a conspiracy theory for another day.
- nroets 8y agoWe (South Africa) are not (yet) bankrupt. Bell Pottinger cannot be blamed for our problems. The problem is pure and simple that the state is spending too much money on civil servants and inefficient state owned companies.
- buyx 8y agoYou're correct, Bell Pottinger is not to blame for the structural problems in the South African economy, and I never said otherwise. However, many of these issues date back decades (apart from a period of economic liberalisation from the late 80s to early 2000s, South African governments have favoured a large degree of state control over the economy). My comment was referring to the bankruptcy of Bell Pottinger, not South Africa. What Bell Pottinger did, is provide cover for a state capture programme, that, over a short period, funneled money from state owned companies and other parts of the state to the Gupta and Zuma families, and in doing so tried to foment a race war.
- setgree 8y agoKey question about this, to me: who has more credibility, Goldman Sachs or the Malaysian government? I think the answer is Goldman Sachs. That's not praise for them. If it were Singapore filing charges -- and the article suggests they are looking into it -- then I"d believe Singapore. But the scandal itself tells you a lot about the Malaysian government's credibility and honesty.
- karmasimida 8y agoI would say Malaysian government, since they need to be responsible for 10s of millions of people's life.
- antidesitter 8y ago> I would say Malaysian government, since they need to be responsible for 10s of millions of people's life. This is very funny. It’s like saying Stalin or Mao commanded superior credibility because they were responsible for tens of millions of lives.
- karmasimida 8y agoI didn't see it that way. Malaysian government is elected democratically, so unlike Stalin/Mao, they are bestowed with power to fulfill the will of the people.
- antidesitter 8y agoReplace with any corrupt elected government then. > they are bestowed with power to fulfill the will of the people Bestowed with power != using it properly.
- rovek 8y agoIt's fair to say GS has credibility for running a profitable business, not necessarily doing so while adhering to any given ethical (or in some cases legal, since 2008) code. Also, as pointed out elsewhere in the comments, Malaysia has changed government quite recently. https://en.wikipedia.org/wiki/2018_Malaysian_general_election https://en.wikipedia.org/wiki/2018_Malaysian_general_electio...