An Asian subsidiary of Goldman Sachs will plead guilty to charges in the United States to resolve a foreign corruption and bribery case over the looting of billions of dollars from a Malaysian sovereign wealth fund, according to a person familiar with the agreement.
The Wall Street bank’s parent company will admit mistakes, the person said, but will not itself have to enter a guilty plea as part of the deal with federal prosecutors. The bank also avoided the appointment of an outside monitor to review its compliance procedures.
The settlement, which also requires the bank to pay more than $2 billion in penalties to the Justice Department and U.S. securities and banking regulators, is scheduled to be formally announced on Thursday morning, according to two people briefed on the plans.
The agreement — negotiated over nearly two years with federal prosecutors in Brooklyn and in the kleptocracy division of the Justice Department — ends an investigation into one of the most serious scandals in the bank’s long history. But the settlement is nonetheless a black eye for Goldman Sachs, which has never before been required to plead guilty in a federal investigation.
A bank spokeswoman declined to comment. The terms of the guilty plea were first reported by The Wall Street Journal.
The scandal centered on the 1Malaysia Development Berhad fund, known as 1MDB, and spanned the globe. It brought down the government of Malaysia’s prime minister at the time, Najib Razak, and turned a financier with expensive tastes named Jho Low into an international fugitive.
It was one of the more brazen money laundering and corruption schemes in recent memory: More than $2.7 billion raised from a series of bond offerings arranged by Goldman was diverted into the pockets of powerful Malaysians, including the friends and family members of Mr. Najib.
The fraud financed lavish lifestyles for its beneficiaries. There were paintings by van Gogh and Monet, a mega-yacht docked in Bali, a grand piano made of clear acrylic that was gifted to a supermodel, and a king’s ransom in jewelry. Pilfered money also financed a boutique hotel in Beverly Hills, a share of the EMI music publishing portfolio and the Hollywood movie “The Wolf of Wall Street.”
All of that, and more, was paid for with looted money raised by Goldman Sachs, which earned $600 million in fees to arrange the bond sales.
Nicole Hong contributed reporting.