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David Solomon, Goldman Sachs
Andrew Harrer | Bloomberg | Getty Images
Goldman Sachs chairman and CEO David Solomon said the investment bank is working hard to put the 1Malaysia Development Berhad scandal behind it.
“We are spending a lot of time being reflective and really thinking about how it was that we wound up having somebody we hired at the firm, promoted at the firm, became a partner with the firm and turned out to be a criminal,” Solomon said on Monday in an interview with CNBC’s David Faber at the Milken Institute Global Conference in Beverly Hills, California.
“We own that, that’s on us … We are working as diligently as we can to put it behind us and move on and stay focused on our clients and businesses,” he added.
The person Solomon referred to was Tim Leissner, a Goldman partner who pleaded guilty to U.S. bribery charges in August for his role in helping raise funds through bond offerings for a state investment fund known as 1MDB.
Goldman has been going through its worst scandal since the financial crisis as the fund is the subject of corruption and money-laundering investigations in at least six countries. It’s always been the bank’s defense that 1MDB is result of a few bad employees, rather than something broader about firm or its culture.
“We committed a significant amount of capital in a part of the world where the distribution process isn’t clean and simple. In those transactions, one was sold very quickly; one took almost a year to distribute. The risk is real,” Solomon said.
“If you actually look at other transactions in other developed economies where you are committing sizable capital like that, the risk premium for making that commitment then structuring, rating and distributing the paper, this wasn’t out of the ordinary,” he added.
The bank’s shares were battered last year amid the scandal, falling more than 34% in 2018. They have partially recovered this year, climbing more than 23%.
