Goldman Sachs is arguing that there is nothing to justify it being charged in relation to the Malaysian 1MDB scandal. Nicola Sharp of business crime solicitors Rahman Ravelli believes the bank may need to examine how its senior management were apparently unaware of what happened.
The US Justice Department's investigators are recommending that Goldman Sachs pleads guilty to criminal violations as part of a settlement regarding its alleged role in facilitating the corruption scandal at Malaysia's 1MDB sovereign wealth fund.
Goldman Sachs has said that it does not believe that either the facts of the case or the law justify charges being brought against it. A spokesman for the bank has argued that this was the case "particularly because senior management was unaware of the criminal activity."
The US Justice Department and the Malaysian Attorney General Tommy Thomas have accused two former Goldman Sachs bankers of helping individuals associated with Malaysia's former Prime Minister Najib Rizak misappropriate billions of dollars from 1MDB. It is alleged that the billions were the proceeds from three bond sales underwritten by the bank.
Mr Thomas has stated that Goldman Sachs benefited by receiving underwriting and arranging fees of around $600 million from the deal. He claims that figure was several times higher than the market rates and industry norms that existed at the time the sales were arranged.
While Goldman Sachs claims that its senior management was unaware of any criminal activity, this in itself falls very far short of being a defence to allegations of bribery and corruption.
The bank has stated that it will fight any charges. In order to do this, it will certainly need to look long and hard at what happened and the activity of those individuals who are said to have been involved. But Goldman Sachs will also have to look equally closely at how the individuals involved were able to engage in what is now being viewed as criminal activity without its senior officials being aware of what was happening.
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