Goldman Sachs and Gary Cohn have broken their impasse over pay clawbacks related to the 1MDB scandal, with the bank’s former president agreeing to pay millions of dollars to charity rather than returning it to the company as it had requested.
In October, the bank committed to clawing back or withholding as much as $175m in compensation from senior staff, to acknowledge the institutional failures that contributed to the 1MDB corruption scandal.
“We are pleased that Gary has chosen to support charitable organisations that are doing important work and put this matter behind us,” the bank said in a statement. A person familiar with the situation said Mr Cohn’s donations were “in line with what the board asked for” — a sum that has been reported as roughly $10m by Bloomberg.
Goldman helped raise billions of dollars that were pillaged from the Malaysian state development fund 1MDB, and the bank’s subsidiary in the country pleaded guilty to a bribery charge over the affair.
Goldman agreed to a record $2.9bn global regulatory settlement in October, ending years of investigations related to the scandal.
Goldman’s board has said that while none of its senior management were “involved in or aware of” illicit activity related to 1MDB, clawbacks were “appropriate in light of the findings of the government and regulatory investigations and the magnitude of the total 1MDB settlement”.
Mr Cohn had been holding out against returning any of his pay. He left the bank in 2016 to serve in the Trump administration, at which point his deferred compensation was brought forward and converted to cash.
He plans instead to give the money to Covid-19 relief and social justice causes, according to people familiar with the arrangement.
His spokesperson said: “Mr Cohn is a team player, and as a good corporate citizen, he volunteered many weeks ago to make a significant charitable contribution to Goldman Sachs-sponsored organisations and looks forward to doing so.”
Several other current and former Goldman executives have agreed to return compensation, according to a person familiar with the situation including: current chief executive David Solomon; his predecessor, Lloyd Blankfein; former head of Europe, Middle East and Africa, Michael Sherwood; and former vice-chairman Mike Evans. Board member David Viniar had also co-operated with the bank’s requests.
Several current executives face clawbacks, too, including chief operating officer John Waldron, chief financial officer Stephen Scherr and Goldman Sachs International boss Richard Gnodde.
Goldman is withholding $24m and seeking to claw back another $51m from former partner Tim Leissner, who has pleaded guilty to US charges over the 1MDB affair; former banker Roger Ng, who is fighting US criminal charges; and former partner Andrea Vella, who has not faced criminal charges but was banned from working in the US securities industry.