Goldman Sachs has sworn that only two personnel were primarily involved in intensifying the 1MDB scandal, but insiders perceive that boards controlled by senior managers permitted the deals. Part of the insiders’ assumption is Goldman bankers aided Malaysian financier loot billions of dollars from an international investment fund.

According to the iconic bank, the two, who were responsible for the mess, are Gold partner Tim Leissner who begged guilty in August to U.S. corruption charges and managing director Roger Ng who was arrested in Malaysia. The U.S Justice Department in November charged the two. Meanwhile, Goldman Sachs Group Inc. has placed third executive Andrea Vella on leave.

1MDB has been Facing Scrutiny

1Malaysia Development Berhad (1MDB) is a company in Malaysia solely maintained by the Minister of Finance (Incorporated). Focusing on areas of real estate, tourism, energy, and agribusiness, 1MDB was recognized to motivate collaborative initiatives for long-term economic expansion for the country by building global partnerships and endorsing international direct investment. The company has been experiencing inspection that started in 2015 for its questionable money dealings and the evidence points to fraud, money laundering, and theft. Recently, the U.S. Department of Justice filed a lawsuit due to approximately US$3.5 billion that was taken from Malaysia’s 1MDB fund.

Published on Tuesday as per Financial Times, those that were named in the charge sheets include Goldman Sachs (Singapore) PTE, Goldman Sachs International (based in London), and Goldman Sachs (Asia) LLC which is listed in Delaware but centered in Hong Kong. Even though there’s no final decision yet, a court date is expected to be set in March.

The Insiders’ Perspective About the Scandal

Current and previous employees of Goldman Sachs Group Inc. think that creating a huge deal such as 1MDB that created a US$6.5 billion fund is riskier than typical arrangements. On that note, insiders speculate that multiple top firm-wide boards possibly examined the deal. One of the bank’s staff who opted to remain anonymous to protect current dealings with the bank stated that before making a big decision, there must be an intervention of senior people.

As observed on its global business, Goldman’s shares went down 35 percent. It’s considered as the worst performance of its huge-bank peers this year. It poses a threat to the US bank’s reputation if the charges result in a tribunal. Goldman’s management team set aside bank’s risk-management process and its culture. They blamed the two disgraced bankers because of the bank’s downfall.

According to the report of Financial Times which was strengthened by anonymous staff with knowledge of the condition, the people who permitted the 1MDB deals include Stephen Sherr who just became Chief Financial Officer last November. The claim comprises former CFO Lloyd Blankfein for examining and allowing the risky deals.

Goldman’s Response to Accusations

The Goldman committees emphasized to Malaysian officials that the main reason they approved the 1MDB deals was due to the availability of cost-effective options to raise money. But, according to staff, the client wants to rush the deal that ended up taking the costlier course than what was expected. The bank eventually procured US$600 million in fees which is a higher amount than usual for US$6.5 billion-insurance.

The opportunity gave Low Taek Jho, also known as Jho Low, to loot billions from the fund. According to the Wall Street Journal, Goldman ignored the fact that the deals could gain regulatory and media analysis. With this, analyst Mike Mayo said on his note last Monday that Goldman was provided 18 months to clean the clutter and settle the US$5 billion expenses.

Moreover, Goldman responded to Malaysia and insisted that the government officials and employees of 1MDB lied to them about the whereabouts of the bond proceeds. Malaysia filed criminal charges against Goldman and asked the bank to pay them US$3.3 billion despite Goldman omitting facts in its offering statements connected to the 1MDB deals observed by Malaysian authorities. Goldman also disputed that under the Malaysian legal process, Goldman Sachs entities were not given with an opportunity to be heard before the filing of the charges.

It took 33,000 people and several years to create the Goldman Sachs Inc. but its reputation rapidly tarnished. The ex-banker concluded by hoping that all the people who are still in the firm should be held accountable.