SHORT QUESTION (ESSAY / CASE STUDY / EXERCISE)

PROGRAMME BACHELOR OF BUSINESS ADMINISTRATION

MODULE BUSINESS AND SOCIETY

TOTAL MARKS 20 MARKS

Read the case study below and answer the questions that follow: [20 marks]

1MDB scandal: Malaysia files charges against Goldman Sachs

Goldman Sachs and two former bankers have been hit with criminal charges by Malaysian authorities over the
1MDB corruption scandal.The country’s attorney general, Tommy Thomas, said Goldman subsidiaries and ex-
bankers Tim Leissner and Roger Ng Chong Hwa are accused of helping to misappropriate $2.7bn, bribing
officials and giving false statements when helping to issue bonds that would raise proceeds for state
development fund 1MDB.They are being charged alongside former 1MDB employee Jasmine Loo Ai Swan
and Low Taek Jho, a Malaysian financier who has been accused of masterminding the fraud.Malaysia is
looking to claw back lost money by imposing criminal fines against the accused that rise to more than $3bn
once the fees received by Goldman Sachs for the bond sales are factored in.Vast sums were allegedly looted
from 1MDB in a fraud that is said to have involved former Malaysian leader Najib Razak and his associates,
and used to buy everything from yachts to artwork, and fund the production of Hollywood films including The
Wolf of Wall Street. It also contributed to the last Malaysian government’s shock defeat at historic elections in
May.“Malaysia considers the allegations in the charges against all the accused to be grave violations of our
securities laws,” Thomas said in a statement. “And to reflect their severity, prosecutors will seek criminal fines
against the accused well in excess of the $2.7bn misappropriated from the bonds proceeds and $600m in fees
received by Goldman Sachs.” If the accused are convicted, prosecutors have said they will push for sentences
of up to 10 years in prison for Leissner and Ng.“Their fraud goes to the heart of our capital markets, and if no
criminal proceedings are instituted against the accused, their undermining of our financial system and market
integrity will go unpunished,” Thomas added.News of the prosecution is a fresh blow for Goldman, with the
Wall Street giant’s corporate culture having come under increased scrutiny as details of the scandal continue
to emerge.The US Department of Justice has already charged Leissner and Ng for conspiring to launder
billions of dollars embezzled from 1MDB. Leissner last month pleaded guilty to conspiracy to launder money
and conspiracy to violate the Foreign Corrupt Practices Act. Ng was arrested last month in Malaysia. Low
Taek Jho, was also hit with charges but is still at large.Responding to the new charges from Malaysia,
Goldman Sachs said: “We believe these charges are misdirected, will vigorously defend them and look
forward to the opportunity to present our case. The firm continues to cooperate with all authorities investigating
these matters.” Goldman has come under fire for its role in underwriting bonds totalling $6.5bn on three
occasions for 1MDB, for which they earned $600m in fees.Leissner, who worked as south-east Asia chairman
and managing director at Goldman, and Ng, a former managing director at the bank, conspired with Jho and
others to bribe Malaysian officials to ensure that Goldman was selected to work on the bonds, Thomas said in
a statement.The money earned by Goldman for the bond issuances was also

“several times higher than the prevailing market rates and industry norms”, the statement said.Those accused
personally benefited from receiving stolen funds and also got large bonuses and improved their career
prospects, Thomas claimed. False statements were presented to investors suggesting the proceeds of the
issuances would be used for legitimate purposes, he added.Malaysia’s prime minister, Mahathir
Mohamad, who came to power in part on a pledge to investigate the 1MDB scandalhas been taking an
increasingly tough line against Goldman and has accused the bank of cheating the country.Since his election
defeat, former Malaysian leader Najib Razak has been arrested and hit with dozens of charges over the
scandal and is likely to face a long jail term if convicted.Low has said he is innocent. Goldman Sachs has
consistently denied wrongdoing. Reuters reported on Monday that lawyers for Leissner and Ng could not be
reached immediately.

Source:https://www.theguardian.com/world/2018/dec/17/1mdb-scandal-malaysia-files-charges-against-
goldman-sachs//dateofaccession 29th Dec 2018)

Question One

1. Do you think the ethical fabric in Goldman Sachs has been worn out? Give your own

views citing the most relevant ethical theories you can connect with. (5 marks)

1.1 Discuss the types of Ethical programs that exist in these context. (10 marks)

Question Two
2. Discuss in the context of the above case, the role of Corporate Governance in
companies. (5 marks)
Assignment Guidelines

 Your assignment should include a Table of Contents page. See www.aded.co.za/698 for an
example.

 Text: Font Arial or Times New Roman (12); Spacing 1.5 lines.

 All text must be justified at each margin.

 The length of your answers to each question should be in line with the mark allocation. As a rough
guide - your answer should not exceed 2 pages for a 10 mark question. All answers should be
appropriately structured (Introduction, Body, Summary/Conclusion).

 Your answers must also include any relevant theories, charts, tables and/or exhibits necessary to

support your analysis and recommendations. All external sources used should be referenced.

 Ensure that your content in the assignment are not merely reproduced from other sources without

some rephrasing of the text together with original critical thoughts, comments and views.

END OF PAPER