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JPMorgan has agreed to pay $330mn to the Malaysian government to settle claims related to its role in the 1MDB financial scandal.
In a joint statement with the Malaysian government on Friday, JPMorgan said it would contribute the amount to Malaysia’s Assets Recovery Trust Account “without admission of liability”.
It added that the agreement “resolves all existing and potential claims and binds both parties from any future claims or litigations related to 1MDB”.
The fraud on 1MDB, Malaysia’s sovereign wealth fund, was one of the biggest in history. Investigators in the US have alleged that at least $4.5bn was stolen from the fund through several schemes masterminded by Malaysian financier Jho Low, who remains at large but maintains his innocence.
It led to the prosecution of Malaysia’s prime minister at the time, Najib Razak, who was later convicted and sentenced to six years in prison. The scandal also involved several of the biggest banks across the US, Europe and Asia.
JPMorgan’s Swiss unit was one of multiple banks sued by 1MDB in 2021 as the fund tried to recover losses, alleging fraudulent breach of duties, conspiracy and breach of trust on the part of the banks.
Separately, on Friday Swiss prosecutors fined JPMorgan SFr3mn ($3.7mn) for “failing to take all reasonable and necessary organisational measures” to prevent “aggravated money laundering”, in connection with the 1MDB scandal.
The fine relates to SFr174mn worth of overseas bank transfers involving the Wall Street lender between October 2014 and July 2015, said the Swiss attorney-general’s office.
The 1MDB scandal uncovered a global web of corruption and drew in a series of top international financial institutions.
Goldman Sachs struck a $3.9bn settlement in 2020 with Malaysia over losses the south-east Asian country suffered from the scandal. Goldman admitted paying more than $1bn in bribes to obtain underwriting work and paid nearly $3bn in criminal fines under a resolution with the US Department of Justice.
The bank docked the pay of chief executive David Solomon and its president John Waldron in 2020 for “institutional failure”, but said the two men had not been involved in or aware of any illicit activity.
Tim Leissner, the disgraced former Goldman banker at the heart of the 1MDB scandal, was sentenced to two years in prison earlier this year after pleading guilty to bribery, conspiracy and money laundering charges.
In a separate statement on Friday, JPMorgan said: “We appreciate the collaboration with the Malaysian government in resolving past matters related to 1MDB, which have been thoroughly reviewed. Since then, we’ve enhanced our controls, earning the trust of regulators in Switzerland and beyond.”
Additional reporting by Olaf Storbeck in Frankfurt
https://www.ft.com/content/63b81c66-efb5-4264-a73b-0617d856f441
