Will Donald Trump tackle the vampire squid?

Goldman Sachs isn’t just unpopular in the United States: their reputation black hole is expanding worldwide. In December 2018, Malaysia filed criminal charges against the investment giant over the 1MDB scandal, referred to as ‘the biggest financial scam in history’ — though Kuala Lumpur has indicated that it might be willing to drop the charges if Goldman pays $7.5 billion in reparations. After years of turning a blind eye to Goldman’s predatory behavior, hopefully 1MDB will push governments to take action against the firm memorably described as ‘a vampire squid’.

In the dramatic saga, large chunks of the 1MDB state fund — founded in 2009 by former Malaysian Prime Minister Najib Razak to seek foreign investment to boost green energy and tourism in Malaysia — were siphoned off to buy expensive art, a luxury yacht, even to bankroll The Wolf of Wall Street. According to Kuala Lumpur, Goldman was instrumental in helping deceive investors and embezzle from the fund.

Central to the 1MDB scandal is rogue Malaysian financier Low Taek Jho, commonly known as Jho Low. Low, who earned the sobriquet ‘the Asian Great Gatsby’ while attending the Wharton School of Business, allegedly bilked around five billion from 1MDB for purchases like the roughly $200 million of jewelry he gifted to model Miranda Kerr. In one particularly surreal episode, a heavily inebriated Low — while recording a track with DJ Swizz Beatz — told Busta Rhymes ‘I own you! You’re my bitch!’ These were the words of a man at the height of his power, with nearly unlimited access to capital — the money intended for the betterment of Malaysia.

So, how did Low get there and how did Goldman allegedly help?

When 1MDB was created, Low apparently talked Najib into allowing him to have a significant role in the fund by insisting that he had a ‘special relationship’ with oil-rich Middle Eastern countries including Saudi Arabia and the United Arab Emirates, which Low suggested would come to see Najib and Malaysia as strong Asian partners and invest in them accordingly.

Instead, while the fund was racking up huge debts, Goldman was racking up substantial paychecks. Low, rumored to be hiding out in China, continues to maintain that he is wholly innocent. New Malaysian PM Mahathir Mohamad, meanwhile, has been happy to pin the blame for the 1MDB graft on rival politician Najib, suggesting that $681 million of the funds ended up in Najib’s hands.

Najib, for his part, has claimed the charges against him are political vengeance, and singled out Goldman Sachs for failing to carry out its responsibility to safeguard Malaysia’s interests. Indeed, what prosecutors and politicians alike allege is that Goldman was knowingly involved in large-scale embezzlement — a problematic assertion given the firm’s already tarnished image.

Getting involved in the troubled fund was a lucrative proposition for Goldman, which netted $593 million in profits for helping acquire $6.5 billion through three bond offerings. As pressure from prosecutors mounts, Goldman is trying increasingly desperate tactics — from a too-little-too-late apology to a surreal campaign to smear one of its former star bankers — to get off the hook for 1MDB. The investment bank has been globalizing its grift for years, but 1MDB showcases just how extreme the firm’s excesses have become — and how unwilling it is to take responsibility for its errors. Instead Goldman is letting former employee Tim Leissner take the fall.

Leissner left Goldman in 2016, but has been fingered by his former employer as the main culprit who helped siphon off the money while serving as Goldman’s South East Asia chairman. The financial firm is now employing ‘scorched-earth tactics’ against Leissner, formerly one of Goldman’s rising stars, painting him as a madcap villain.

A bizarre PowerPoint presentation Goldman showed to US prosecutors last November argued that Leissner got his PhD from an online diploma mill and portrayed him as a licentious, bigamous ne’er-do-well who sneakily hid his wrongdoing from Goldman’s compliance department. The presentation, which also alleged that Leissner had an affair with a Goldman client, only emphasizes the doggedness with which Goldman is setting up their former employee as the 1MDB fall guy.

Many senior Goldman officials were key in advancing the 1MDB fund, so it’s natural they now want to spread the idea that Leissner was a one-of-a-kind rebel who they couldn’t control. Malaysian officials don’t quite buy it — finance minister Lim Guan Eng recently scoffed ‘Don’t tell me you don’t know where the money went’ — and the details of the case, as well as Goldman’s more-than-checkered history, make the chance that Leissner is just a rogue con man who took both Goldman and Malaysia for a ride laughably implausible.

Thanks to 1MDB, former Goldman CEO Lloyd Blankfein — who stepped down in October with an $85 million payout — failed in his mission to clean up the firm’s image, which had been badly corroded by the 2008 subprime meltdown. Blankfein himself hasn’t come out unscathed: on one occasion Leissner arranged a private meeting between Blankfein and Low. Given that Low turned out to be the main brains behind the whole scheme, the meeting calls into question just how much of a unique malefactor Leissner was in the proceedings.

There were other red flags, which experienced Goldman executives should have noticed. Former investment banker William Cohan deemed it ‘shocking’ that a nearly 10 percent fee on a $6.5 billion capital raise didn’t cause concerns among the committee of Goldman bankers charged with vetting the 1MDB deal.

Blankfein’s replacement, David Solomon, has kept up the line that Leissner alone bears the blame for the 1MDB fraud.

Last week, Solomon told analysts that Goldman apologized to the Malaysian people ‘for Leissner’s role in that fraud’ and insisted that the company had ‘looked back and continue to look back to see if there is anything that we as a firm could have done better’.

Solomon, who moonlights as a producer of EDM music, released his first single ‘Don’t Stop’ last June: if the title was referring to Goldman’s corrupt practices, Solomon was right on the money.

Indeed, the sort of hush-hush deals Leissner was spearheading are par for the course for Goldman. Though Leissner plead guilty to misallocating $50 million from the bond offerings and misleading Goldman’s compliance department about how big a part Low played in the deals, he also stated that such an under-the-radar approach was ‘very much in line’ with the firm’s usual.

Is this really a surprise to anyone? Goldman has a long history of being deeply enmeshed in crises around the world. Take the company’s involvement in the Greek debt crisis, for example: Goldman played an integral role in helping the beleaguered nation hide how much debt it had to meet EU requirements in 2001 — and, in the process, plunging Greece into economic chaos. Goldman, of course, pocketed an immense sum of money off the deal — $793 million.

Indeed, global audiences should be unsurprised by Goldman’s corrupt behavior. Americans in particular should keep Goldman’s litany of sins in vivid memory: after all, it was American taxpayers that helped bail out Goldman after they contributed to crashing the US economy in 2008. Nor has Goldman tired of sucking America dry — only three years ago, Detroit’s water services had to pay $547 million in penalties to Goldman and other banks to end an astronomically expensive deal for interest-rate swaps.

As the 1MDB-Jho Low affair shows, the bank has continued this predatory behavior around the world. Though any astute observer would be able to deduce far more malfeasance than just a few dishonest individuals in the 1MDB scandal, Goldman’s stock has gone up lately, buoyed by statements from CFO Stephen Scherr that they will likely only lose around $2 billion from consequences from the 1MDB scandal and other ongoing investigations. So far, Goldman appears to be facing no real pushback in the public square or the legislature.

During his 2016 campaign, President Donald Trump was quick to call out Goldman bankers and politicians, both on the left and the right, who had cozied up to the investment firm. His denunciations were met with roars of approval: Trump fans even accosted Republican senator Ted Cruz, who used a Goldman Sachs loan to finance his 2012 campaign, and harassed him about where his ‘Goldman Sachs jacket’ was.

Unfortunately, once in office, Trump has stacked his cabinet with Goldman big-timers and has helped Goldman and similar behemoths maintain their market stranglehold. As more details about Goldman’s role in the 1MDB scandal come to the fore, it becomes increasingly clear that rather than changing its ways after 2008, the bank has simply managed to loot taxpayers at home and abroad more creatively.

Of late, Goldman has been trying out a number of strategies to earn back people’s trust, from their ‘Marcus’ online banking services to Solomon’s attempts to ‘open up’ the company and make it more transparent. These appear, however, to be more about public image than actual structural change.

If President Trump was ever serious about ‘draining the swamp’, the 1MDB scandal proves that Goldman Sachs would be a good place to start, be it via regulations or fundamental rethinking of the many benefits it enjoys. Steve Mnuchin, Goldman’s former Executive Vice President, remains Treasury Secretary but several other GS alums have left the Trump administration. This means the 45th president is less entangled with the Vampire Squid than any of his predecessors. Will he tackle the diseased roots of the financial system? Or will he be too dazzled by the company’s gargantuan profits?