Report: Goldman’s new CEO says ‘personally outraged’ over 1MDB fiasco

Report: Goldman’s new CEO says ‘personally outraged’ over 1MDB fiasco

KUALA LUMPUR,. Goldman Sachs CEO David Solomon told the US investment bank’s 40,000 employees that he was “personally outraged” by the “reprehensible” actions of a few individual former staff charged with fraud over 1Malaysia Development Berhad (1MDB), Bloomberg reported today.

Solomon, who last month took over the reins from Lloyd Blankfein who has been incriminated in the Malaysian sovereign financial scandal, also sought to assure staff that the bank would survive though its shares have continued nosediving for the fifth straight day yesterday.

Bloomberg said Goldman shares dropped 0.3 per cent on the New York exchange, cutting its market value by more than US$10 billion.

“I am personally outraged that any employee of the firm would undertake the actions spelled out in the government’s pleadings.

“The behaviour of those individuals is reprehensible and inconsistent with the good work and integrity that defines work that 40,000 of you do every day,” Solomon reportedly said in a voicemail message to employees last Wednesday.

Bloomberg said a spokesman for Goldman confirmed the voicemail was authentic, but did not disclose the identity of the representative who did not comment further.

Solomon also advised staff to buckle down to work and not to believe rumours about the future of their bank, one of the largest in the US.

In the voicemail, he reportedly said “any speculation in the press or elsewhere” on Goldman’s outcome “is completely unfounded”, seeking to contain potential further fallout over former South-east Asia chief Tim Leissner’s admission that he bribed officials and that the bank had a culture of secrecy.

“A group of people, including some of us in the executive office, are intensely focused on this matter.

“For the rest of us, our job is to focus on our clients, our business and the many opportunities ahead.”

However, analysts said the 1MDB scandal will cost Goldman. The bank’s shares dove 7.5 per cent Monday, the worst in seven years, after news that the Malaysian investment deal had involved the top management then headed by Blankfein on top of charges in the US laid against its Leissner and former Malaysian banker Roger Ng.

“Reputationally, it is a disaster for Goldman.

“Goldman clearly is at risk of significant charges with significant penalties in this case,” Bloomberg reported Oppenheimer & Co analysts led by Chris Kotowski said in a note to its clients.

Analysts at Sanford C. Bernstein & Co told Bloomberg that Goldman could be hit with fines up to US$2 billion from the scandal, though they added that it is “ultimately manageable” for US investment bank.