Attorney General William Barr oversaw the Justice Department’s negotiations with financial powerhouse Goldman Sachs for its role in the 1MDB scandal–one of the biggest financial scandals ever–despite the investment bank being represented by law firm Kirkland & Ellis, where Barr worked just before he took over the top spot at the DOJ.
Due to the obvious conflict of interest, Barr required an ethics waiver to avoid recusing himself from the case, but reports that Goldman’s plea deal includes a fine of less than $2 billion–well below industry predictions which ranged from approximately $4 billion to $6 billion–has raised red flags as to whether Barr’s ties to Kirkland has influenced a settlement in any way.
New: Goldman Sachs may pay a fine that is billions less than expected for its role in one of the biggest financial crimes ever. AG Barr previously worked for the law firm representing Goldman, raising the prospect of possible conflicts of interest. https://t.co/Qzeb0basN4
— Noah Bookbinder (@NoahBookbinder) February 3, 2020
If Goldman gets off lightly in the 1MDB scam, Attorney General William Barr’s role will come under intense scrutiny: https://t.co/gnghuJzJeV
— Tom Wright (@TomWrightAsia) February 4, 2020
After obtaining the ethics waiver in April 2019, Barr “directly immersed himself in the case,” which many have viewed as a barometer for gauging the Trump administration’s approach to corporate malfeasance.
The charges centered on the bank’s efforts in helping Malaysian state investment fund 1MDB raise $6.5 billion, which was supposed to be used to promote economic development but was instead misappropriated through a criminal conspiracy involving international money laundering and bribery, according to the DOJ.
Goldman took in $600 million in fees for 1MDB and was expected to be battered with a massive financial penalty for their role in the scandal that could have been as high as $9 billion, meaning a fine of less than $2 billion amounts to little more than a slap on the wrist for one of the richest banks in the world.
Further casting doubt on the DOJ’s objectivity is that President Donald Trump’s hand-picked head of the DOJ criminal division, Brian Benczkowski, was also a former partner at Kirkland who obtained an ethics waiver before becoming heavily involved in the case. Benczkowski’s close friend and former boss is also a member of Goldman’s legal team.
“To complicate matters, Benczkowski’s former boss Mark Filip, joined Goldman’s legal team,” the Asia Times reported in December. “Filip, a senior partner at Kirkland and Ellis, served as deputy attorney-general in 2008-09 with Benczkowski serving as his chief of staff. Goldman’s hiring of Filip – who the Financial Times reported is ‘close friends’ with Benczkowski – had earlier prompted speculation that the criminal division chief would recuse himself from leading investigations into the bank’s 1MDB activities, though that didn’t happen.”
Goldman’s deal with the DOJ is expected to be finalized in the coming weeks. The fallout from the scandal continues.
[image via Chip Somodevilla/Getty Images]