Goldman Sachs Group, Inc. cut Chief Executive Officer (CEO) David Solomon's 2020 pay by 35% or over $10 million. The pay

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Goldman Sachs Group, Inc. cut Chief Executive Officer (CEO)
David Solomon's 2020 pay by 35% or over $10 million. The pay cut
related to Goldman's offering bribes to foreign government
officials to acquire bond underwriting business from Malaysia's
IMDB Fund. The firm paid a $3 billion settlement in an agreement
reached with the U.S. Department of Justice. This is the largest
fine ever paid by a U.S. company. Many other countries are also
investigating the bribery. Malaysian regulators reached a $3.9
billion settlement with Goldman in 2020. Two of the firm's
executives have been indicated for criminal charges alleging that
they arranged the bribes.
In helping underwrite $6.5 billion of bonds sold to investors,
the firm's executives ignored many red flags related to the fraud
and appeared only interested in securing the business. The top
three executives at Goldman were not aware of illicit behavior, but
the large bribes provide evidence of Goldman's failure to have an
effective ethics and compliance program. The matter provides strong
evidence of institutional failure. The Board of Directors was also
unaware of the bribes, but blamed the oversight failure on the top
three officers. This scandal provides a case for why ethics and
compliance needs to be a top executive and board concern in any
organization. Two other executives had their pay cut by $7 million
and $6 million as a punishment for lack of proper oversight.
The U.S. Justice Department accused a Malaysian financier of
masterminding the plot to channel money to the Malaysian Prime
Minister's bank accounts. It is estimated over $4.5 billion was
stolen. The Goldman executives involved in the scandal 'turned a
blind eye' to the bribery and fraud in order to secure Goldman
income for the bond placements. If Goldman had compliance audits in
place, they should have detected the misconduct and taken action
not to participate in criminal activities. There are many questions
to consider in evaluating the integrity of Goldman's oversight and
compliance. Top management's leadership failed to develop an
ethical culture to address the issues that resulted in this
scandal. How could such a large amount of money move freely without
triggering some internal audit and detection?
Questions:
1) Should the CEO of Goldman receive a $17.5 million (after a
$10 million pay cut) salary for overseeing a major scandal?
2) How could a large investment bank have major bribery
involvement without top management and others being aware?
3) Goldman admitted that it violated anti-corruption laws. How
can Goldman prevent similar violations in the future?
4) What could be done to improve the ethical culture of Goldman
to prevent misconduct in the future?
5) If found guilty, what criminal penalties do you think the
perpetrators should serve, explain your reasoning.