Which control systems did Goldman Sachs’ primarily rely on? (see Section 9.3). How did the systems support the growth strategy and in what respects did they fail with regard to the Malaysian business and more generally? Lloyd Blankfein, Chief Executive of Goldman Sachs, is famous for declaring that his investment bank is ‘doing God’s work’, so important are his bankers’ activities for financing the world economy. However, in 2018, the Department of Justice in the USA charged two former Goldman Sachs bankers, Tim Leissner and Roger Ng, with misappropriating funds from the Malaysian sovereign wealth fund, 1Malaysia Development Berhad (1MDB) and paying bribes to various Malaysian officials. 1IMD appeared to be at the centre of a $2.7bn money laundering and bribery scandal, with Goldman Sachs closely involved. Malaysia’s Prime Minister demanded reparations from Goldman Sachs of $600m.

It was revealed that Lloyd Blankfein himself had met the Malay financier at the heart of the illegal dealings, Jho Low, at least twice.

1MDB was founded by the Malaysian government in order to stimulate long-term investment in Malaysia, for instance through the financing of large-scale energy projects.

In the early years of this decade, Goldman Sachs was earning about $85m annually in fees from IMDB. The most spectacular fee came in 2012, when Goldman Sachs helped IMDB to raise $6.5bn in debt intended to fund the wealth fund’s various investment projects. The fee for this transaction alone was nearly 10 per cent, $600m.

The bankers at the heart of this lucrative business were senior managers within Goldman Sachs. The man responsible for originating many of the deals, Andrea Vella, had been co-head of investment banking in Asia-Pacific ex-Japan (he was demoted and suspended by Goldman Sachs in 2018).

Tim Leissner was the bank’s chairman of south-east Asia as a whole. Roger Ng had been in charge of South-East Asian sales in Goldman Sachs’ fixed-income, currencies and commodities unit.

Goldman Sachs is well-known for its aggressive, bonusdriven culture. It saw the growing South East Asian economies as key to its own continuing expansion. Crucial to this strategy was Andrea Vella. According to the International Financial Review, Vella was ‘a veritable magician’ in financial deals.

He was also well-known for ostentatious living, with his wife famous for driving around Hong Kong in a top-end Maserati.

Explaining how the complex Malaysian deals got past the bank’s internal controls, Tim Leissner admitted to a New York court: ‘I conspired with other employees and agents of Goldman Sachs very much in line with the [Goldman Sachs] culture to conceal facts from [the company’s] compliance and legal employees.’ Formally, all deals, including those with 1MDB, are approved by Goldman Sachs’ capital and client suitability committees. At the time, these were organised on a regional basis, reporting finally to a central committee in New York. Members of deal teams typically remained in committee meetings even though they would abstain from voting. Committees tended to review or approve most proposed deals by consensus. The bank preferred deal teams to attend committee discussions so they could respond immediately to any questions raised by other committee members.