Goldman Sachs' earnings plummeted in the fourth quarter as it prepared to disburse billions for its role in a dazzling international scandal that has affected Hollywood elites such as Leonardo DiCaprio and Martin Scorsese.
The Wall Street giant said Wednesday that it reserved $ 1.09 billion in the last three months of 2019, as it seeks to resolve the accusations that it ignored the red flags by agreeing $ 6.5 billion in loans to 1MDB, a development fund for Malaysia that was later looted.
The reserve reduced Goldman's earnings for the quarter, which led the bank to record earnings per share of $ 4.69, 22 percent less than the previous year despite revenue growth of 23 percent, to $ 9.98 thousand millions.
"While we cannot make sure we reach an agreement or the moment if we do, our discussions with the authorities are progressing and remain active," Goldman chief executive David Solomon said of the 1MDB charge at a conference call. "We are working hard to close this matter as quickly as possible."
Goldman is reportedly in talks with the Department of Justice for a unit to plead guilty to US bribery laws and disburse more than $ 2 billion amid accusations that at least one of its bankers knew that Malaysian financial fancy Jho Low, whom Goldman had repeatedly rejected as a client – participated in the 1MDB bond agreements.
The banker, Tim Leissner, married to Kimora Lee Simons, pleaded guilty in the case and the Securities and Exchange Commission prevented him from working in the industry. According to reports, a second Goldman banker, Roger Ng, is working on an agreement with the Department of Justice while awaiting trial in Malaysia.
Prosecutors in the US UU. And Malaysia accused Low, who is on the run, of bribing public officials to allow him to divert some $ 4.5 billion of money from the fund to live a luxurious lifestyle that included dating Victoria's model. Secret, Miranda Kerr, and fund the Martin Scorsese movie. Wolf of Wall Street ”starring DiCaprio. Low, who organized luxurious celebrity parties on his luxurious yacht, has been photographed dancing with Paris Hilton and flirting with musical artists like Alicia Keys and Usher.
In an interview earlier this month from hiding, Low denied that he was the "intellectual author" of the plan and said that an unidentified country had offered him asylum.
According to reports, the Malaysian government is still looking to fine Goldman with $ 7.5 billion, which means that the pain he felt in the fourth quarter could extend for many quarters to come.
The legal problems of the bank occur when Solomon is working on a major change in the strategy, moving away from commerce, for a long time its main profit engine, towards the construction of a larger consumer business that protects it from changes in the financial markets.
The bank's nascent consumer business, which includes its new online retail bank Marcus, as well as its credit card business, reported a 23 percent increase in revenue, to $ 228 million, during the fourth quarter.
Goldman, one of the first investors in Uber, also "abandoned" its position in the transportation giant in the fourth quarter, the company said, a sale that is expected to have helped increase profits by up to $ 300 million.