Goldman Sachs is finding it hard to distance itself from what it says were the actions of a few bad apples.
The bank has said just two employees were primarily responsible for a deepening international scandal in which Goldman bankers helped a Malaysian financier plunder billions of dollars from an investment fund called 1MDB. The two are Tim Leissner, a Goldman partner who plead guilty to U.S. bribery charges in August, and Roger Ng, a managing director who has been arrested in Malaysia. A third executive, Andrea Vella, has been put on leave.
But according to current and former employees, deals as large as those that helped create the $6.5 billion 1MDB fund require scrutiny from several top firm-wide committees. The 2012 and 2013 bond transactions at the heart of 1MDB were "bought deals" that meant Goldman had to use its capital to buy newly created securities before offloading them to investors. That's riskier than in more typical arrangements where Goldman is merely distributing bonds to investors.
"Anyone who's been there a long time knows you can't do big things without senior people knowing, period," said one former Goldman employee, who spoke on condition of anonymity because he still has dealings with the bank. "No matter how senior you are, there's always somebody above you. So a lot of people had to decide they were comfortable committing billions of dollars to this."