Cohn Shrugs Off Goldman’s Demand for Pay With Check to Charity

(Bloomberg) -- After refusing to return millions in pay to Goldman Sachs Group Inc., Gary Cohn has come up with a workaround that lets him walk away with the upper hand: He’s giving the money away to charity.

The bank’s board had demanded its former president return more than $10 million as part of a broader punishment inflicted on senior leadership, including Chief Executive Officer David Solomon and his predecessor, to demonstrate accountability for the company’s involvement in the 1MDB corruption scandal. Cohn refused. He will donate money to charity, according to a representative for him.

The resolution aims to be a face-saving end to the impasse that left Goldman waiting on one of its most prominent former leaders to participate in what was meant to be a unified act of contrition. The board had publicly announced it would gather money from current and former executives for what it called an “institutional failure” that led to $5 billion in settlements for its role in the looting of a Malaysian investment fund.

U.S. authorities and the bank never accused Cohn of wrongdoing in the scandal.

“Mr. Cohn is a team player, and as a good corporate citizen, he volunteered many weeks ago to make a significant charitable contribution to Goldman Sachs-sponsored organizations,” a representative for Cohn said in a statement. He “looks forward to doing so.”

Cohn didn’t disclose how much he’s giving to charity, which will go to pandemic relief and supporting social justice. The payments may approximate but not amount to what the bank sought, a person familiar with the matter said. The philanthropy may also offer him a tax benefit.

“We are pleased that Gary has chosen to support charitable organizations that are doing important work and put this matter behind us,” a spokesman for Goldman Sachs said.

In a spree of settlements with regulators and prosecutors around the world, the Wall Street firm admitted to wrongdoing and paid the largest penalty ever levied by the U.S. in a foreign bribery case. Afterward, Goldman announced it would seek about $100 million in forfeitures and pay deductions from nine of its most senior current and former executives. That was in addition to another $75 million it’s trying to recoup from three other bankers implicated in the scandal.

But extracting money from Cohn posed a unique challenge. That’s because the bank had accelerated payments to him when he joined President Donald Trump’s White House in 2017 as director of the National Economic Council. The cash-out -- a standard practice when executives jump to senior government posts -- was meant to avoid the appearance of a conflict of interest as he shaped policy.

Goldman’s plan called for executives to give up most or all of a long-term incentive created in 2011 and some other compensation. For Cohn, that would have totaled in excess of $10 million.

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