Goldman Sachs Claw Back

As reported in the New York Times, the Goldman Sachs Board is seeking to claw back approximately $174 million in compensation paid to past and present executives as a result of a $2.9 Billion fine leveled against the company for violations of the Foreign Corrupt Practices Act (FCPA).

It was alleged that the company conspired to pay approximately $1 Billion in bribes to foreign officials in Abu Dhabi and Malaysia, to obtain business for Goldman Sachs.

The size of the US DOJ fine was based on several considerations.  One of those included the fact that high-level employees were involved in the crime.

It’s a very interesting case, in that it demonstrates a very clear effort on the part of the Board to establish a deterrent for any future malfeasance.  It’s also one of the few cases where we see legal ramifications for the bribe receiver in the country where the crime was committed.

Too many times, the illegality of the bribe receiver’s actions go unpunished, even where there is a clear violation of local law and the statute of limitations extends for decades.

In September of 2020, the Malaysian Government dropped criminal charges against Goldman Sachs after the company agreed to pay $3.9 Billion to settle the local bribery probe.  All up, the company has been investigated in at least 14 jurisdictions.

The case records are also unique in that they identify the specific names of the individuals involved in the crime.  Usually, only the titles of the individuals are released to the public.  Or, in some cases, not even that information is divulged.   The records might just say “an employee of the company”.

As stated above, the claw back will affect some past and present executives of Goldman Sachs, while the financial impact on Board members is unclear.  As the New York Times reported, the current CEO, David Solomon, said “it is an important reminder that we are all responsible for each other’s actions, including our collective failures,”.

It is an important reminder that we are all responsible for each other’s actions, including our collective failures

Goldman Sachs CEO, David Solomon