When Goldman Sachs declared its intent to reclaim $67 million from five former top executives over the sprawling 1MDB corruption scandal, it made clear it had already pocketed the money from all but one of them.
The lone holdout — Gary Cohn. Six weeks later, Goldman is still waiting on its former president to pony up the cash.
The bank has failed to persuade Cohn to part with over $10 million in pay he’s already received, according to people with knowledge of the matter. And there’s little the firm can do if he simply refuses or offers up a discounted sum, they said.
Cohn declined to comment on whether he intends to repay the amount in full, saying only in an interview that he is “having very constructive conversations with Goldman Sachs on that.” A representative for Goldman Sachs Group Inc. declined to comment.
Cohn’s resistance stands to sully the bank’s public effort to atone for its criminal role in the plundering of Malaysian investment fund 1MDB. The bank’s board opted to attach accountability to its senior executives, even though they hadn’t been directly implicated by the U.S. Justice Department’s findings. The board called it a way to repair the reputational damage for what was an “institutional failure.”
In the October announcement, Goldman disclosed plans to keep or recoup $67 million it had awarded to former executives and deduct another $31 million from Chief Executive Officer David Solomon and his three top deputies’ pay in 2020. The move came after the Wall Street firm admitted to its role in the biggest foreign bribery case in U.S. enforcement history and agreed to pay about $5 billion in penalties to break free from a slew of probes across continents.
Cohn, who was president for more than a decade, was one of two leaders the bank had to ask to return the money. David Viniar, its former chief financial officer and current board member, has already surrendered his payment, one of the people said. The remaining executives, including former CEO Lloyd Blankfein, were docked from payments still owed to them.
“It goes with the responsibility of leadership to accept some consequences for things that go wrong on your watch,” Blankfein had said of the forfeiture.
Goldman’s plan called for executives to forfeit compensation including most or all of a long-term incentive created in 2011. For Cohn, that reward alone was likely worth more than $10 million at the end of 2016, based on metrics the firm said would determine the ultimate payout.
Cohn had been one of the most fabulously paid executives after a lucrative Wall Street career. When he joined President Donald Trump’s White House in 2017 as director of the National Economic Council, the 60-year-old was able to immediately collect about $65 million in cash and stock tied to future Goldman performance, another $220 million of Goldman equity and stakes in company-run investment funds.
While Cohn had to liquidate his stock to avoid a conflict of interest, it proved fortuitous as the bank’s shares still trade below the mark set three years ago.
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