What is Cost of Equity? – Meaning, Concept and Formula
February 12, 2025
Commercial banking has traditionally been a relationship-driven business. This meant that the business was primarily driven by human-to-human contact. Over the years, banks have acquired the capability to store large quantities of data and then mine the data in order to discover meaningful trends. There are many modern software tools that allow banks to use […]
Markets across the world can also be segregated based on the type of intermediary. Prima facie, it may appear that the type of intermediary is not of much consequence. However, over time, market participants have realized that the type of intermediaries has a profound effect on the liquidity, efficiency as well as transaction costs related […]
It is human nature to plan for rainy days. An individual must plan and keep aside some amount of money for any unavoidable circumstance which might arise in days to come. Future is uncertain and one must invest wisely to avoid financial crisis in any point of time. Let us first understand what is investment […]
In the previous article, we have already seen that it is common for sporting franchises to raise significant amounts of debt funding. We also know that there are certain special characteristics of sports franchises that need to be taken into account before giving out loans to them. One more such important characteristic of debt funding […]
In the previous article, we have already determined why it is important to closely monitor the workings of pension funds and also to regulate them. However, regulation is a broad concept. It encompasses a wide variety of actions that need to be undertaken. In this article, we will have a closer look at various activities […]
The 1MDB scandal is a scandal of epic proportions that was uncovered in Malaysia almost five years ago. This scandal has led to a lot of consequences in Malaysia. For instance, this was the main reason behind the sudden downfall of the previous Malaysian Prime Minister Najib Razak’s government. The main accused, Jho Low, who is supposedly an accomplice of Najib Razak, is also on the run.
However, till about last month, the people of the United States did not have the remotest idea about the 1MDB scandal. All of a sudden, this scandal has gained prominence as it threatens to bring down Goldman Sachs, one of the stalwarts of the American banking industry.
In this article, we will have a closer look at what the 1MDB scandal is and how it has affected Goldman Sachs.
1 Malaysia Development Bhd was a fund that was created by the Malaysian government under the leadership of Najib Razak. The main purpose of this fund was to build better infrastructure in Malaysia and thereby improve its economy. The Malaysian government had raised close to $6.5 billion from various investors for this purpose.
However, vast sums of money were embezzled from this fund. The fund ended up making some questionable investments which include producing movies like The Wolf of Wall Street. The fund also brought strange assets like paintings. However, the scandal really isn’t about the nature of the assets that were brought using the proceeds of the fund. The real issue is that about $3.5 billion, i.e. close to 50% of the fund has been embezzled. As a result, the Malaysian government now finds itself liable to make payments on debt whose proceeds were swindled away.
Obviously, this is a big loss to the government as well as to the people of Malaysia. This is the reason why the new Malaysian government is taking every measure possible to recover the debts. These strict measures include the prosecution of Goldman Sachs.
Goldman Sachs has been an enabler to the 1MDB scam in many ways.
The 1MDB scandal has had a huge impact on the financial position of Goldman Sachs. Some points have been listed below:
To sum it up, a big scandal in a small country has brought the goliath of the finance world to its knees. Hopefully, this scandal and the consequences will prevent Goldman Sachs from engaging in unethical behaviour in the future.
Your email address will not be published. Required fields are marked *