Goldman Sachs Group Inc. headquarters stands in New York. Photographer: Victor J. Blue/Bloomberg (Bloomberg)

Goldman Sachs Group Inc.’s efforts to improve its public reputation since the financial crisis have paid off: There are now slightly more Americans who would be proud, rather than embarrassed, to work there, according to market research firm YouGov.

Whether those good vibes continue will depend on how the firm handles the fallout from the 1MDB scandal, where billions of dollars were siphoned from Malaysia’s development fund. The affair could metastasize into serious reputational black mark for the bank.

While Goldman now likes to present itself to the public as a tech company run by a beat-dropping DJ, or a champion of the consumer with its Marcus digital bank, the U.S. Department of Justice painted a very different picture on Thursday. It filed criminal charges against two ex-bankers for their alleged role in a money-laundering operation that lined the pockets of Malaysian government officials, their financiers and others.

The U.S. charge sheet outlined a culture of greed – and not just the “long-term greedy” once favored by senior partner Gus Levy in the 1970s. The bank, which arranged $6.5 billion of 1MDB bond offerings that netted it $600 million in fees, is described as being so focused on deals at times that compliance came second. Internal controls were allegedly “easily circumvented” by bankers helping to divert the proceeds for illicit purposes.

Prosecutors’ version of events depicts not one but several senior bankers – including Tim Leissner, who pleaded guilty – colluding to cover up bribes and kickbacks.

Goldman “continues to cooperate with all authorities investigating this matter,” a spokesman told Bloomberg News. The firm has said previously it raised money for 1MDB without knowing it would be diverted from the development projects. The bank is far from the only one touched by probes into 1MDB around the world. Singapore has fined eight banks and sent four people to jail over the scandal, for instance.

But the seniority of the Goldman employees being implicated by the U.S. authorities is especially troubling. It makes it harder for the bank to dismiss the allegations as the actions of a lone staffer gone rogue.

The probe’s reach is spreading, not receding: One of Goldman’s top Asia bankers, Andrea Vella, has been put on leave but not charged with wrongdoing, according to Bloomberg News. He matches the DOJ’s description of an unidentified co-conspirator in the case. (A call to Vella by Bloomberg News wasn’t immediately returned; Goldman Sachs declined to comment on his behalf.)

Goldman has faced reputational hits before, such as the Securities and Exchange Commission’s 2010 lawsuit over the sale of mortgage-backed securities before the financial crisis. That triggered much soul-searching at the firm and the creation of a standards committee to review its operations.

“There is a disconnect between how we as a firm view ourselves and how the broader public perceives our role and activities in the market,” then-CEO Lloyd Blankfein said at the time.

The 1MDB scandal is more recent, it touches public funds rather than sophisticated hedge funds, and it is escalating at a time when Goldman is under new leadership and steering deeper into newer, consumer-facing businesses. That’s why the potential damage from the case is so much greater. It can’t be shrugged off.

To contact the author of this story: Lionel Laurent at

To contact the editor responsible for this story: Edward Evans at

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering finance and markets. He previously worked at Reuters and Forbes.

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