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Goldman Sachs set to pay $2bn for 1MDB fraud

Goldman Sachs
Goldman Sachs

Goldman Sachs is understood to be days away from announcing a deal with the US Department of Justice to pay more than $2bn (£1.5bn) following a massive fraud in Malaysia.

Sources told Bloomberg that the two sides have reached a long-awaited pact and that Goldman will avoid a US criminal conviction as a result.

The decision comes after the Wall Street bank agreed to pay $3.9bn to Malaysian authorities in July for its role in the scandal at Malaysia’s 1MDB sovereign wealth fund in 2013. Malaysia dropped criminal charges against the bank and some of its top executives last month.

1MDB was set up to fund infrastructure projects in Malaysia and turn Kuala Lumpur into an Asian financial hub, but instead huge sums were allegedly looted to buy luxury items.

The DoJ has previously claimed that some of the funds were laundered through luxury real estate purchases, art and jewellery in the US as well as through funding Hollywood movies including The Wolf of Wall Street, which starred Leonardo DiCaprio as corrupt trader Jordan Belfort.

The bank, which has always denied any wrongdoing, helped raise more than $6bn in bonds issued by 1MDB.

The US has so far helped recover more than $1bn in assets. Earlier this year the DoJ returned $300m to Malaysia from assets forfeited by financier Jho Low, a consultant for 1MDB accused by prosecutors of leading the alleged heist.

These included a boutique hotel in Beverly Hills, a luxury jet and paintings by Van Gogh and Monet. Mr Low has consistently denied wrongdoing and said the settlement did not constitute an admission of guilt.

A spokesman for Goldman declined to comment.