With Goldman shares in free fall (lending a patina of irony to the bank's call that US stocks are heading for a bear market), CEO David Solomon is doing some much-needed damage control as the DOJ digs into the bank's role in facilitating the $4.5 billion fraud at Malaysian sovereign wealth fund 1MDB.

Solomon, who inherited the scandal from his predecessor Lloyd Blankfein (who himself has been identified as the "mystery" bank executive who attended a 2009 meeting with Malaysian Prime Minister Najib Razak that helped the bank secure the deal), told Goldman employees Thursday that he was "personally outraged" by the bank's role in the scandal, and assured employees that this wasn't consistent with the bank's "good work and integrity."

Except that, historically speaking, ripping off foreign governments is well within Goldman's wheelhouse, as a lawsuit brought against the bank by the Libyan Investment Authority showed.

"I am personally outraged that any employee of the firm would undertake the actions spelled out in the government’s pleadings," the firm’s chief executive officer said in a voicemail left with employees on Wednesday. "The behavior of those individuals is reprehensible and inconsistent with the good work and integrity that defines work that 40,000 of you do every day." [...] "A group of people, including some of us in the executive office, are intensely focused on this matter," Solomon said on the voicemail. "For the rest of us, our job is to focus on our clients, our business and the many opportunities ahead."

Earlier in the week, Malaysia's finance minister demanded that the DOJ force Goldman to return the $600 million in fees that it collected for the three 1MDB bond offerings that it underwrote, as well as the interest-rate spread that the bank charged Malaysia. In an interview with CNBC, the country's 93-year-old prime minister fumed that "obviously we have been cheated by Goldman Sachs."

While the prospect of a refund is one factor weighing on Goldman's shares, the risk of fines and other "sanctions" has also inspired traders to dump the stock, as some analysts suspect that the hundreds of millions of dollars set aside by the bank in a legal contingency fund might not be enough to cover an eventual settlement.

Analysts at Sanford C. Bernstein & Co. estimated that Goldman Sachs could see fines of up to $2 billion from the scandal, a figure they said was "ultimately manageable" for the firm.

The banks' former top dealmaker for Southeast Asia, Tim Leissner, admitted in a plea deal that he conspired to pay bribes and take kickbacks to secure the Malaysian business for the bank, adding that a "culture of secrecy" at Goldman enabled him to do it. Another Goldman banker, Roger Ng, has been charged by the DOJ and is expected to be extradited to the US. As one analyst put it "reputationally, it's a disaster for Goldman."

We're still waiting on reports - which we imagine will eventually surface - about how the scandal has impacted the bank's relationship with some of its other sovereign clients. We have a hunch that, whatever the impact, it hasn't been positive.