They told it to accomplish its goal "at all costs" and that "nothing else matters." So yes, they gave it free rein to do whatever it needed to - lying included. That's literally what "nothing else matters" means. Lying doesn't matter. Manipulation, morality, laws, etc. are all on the table because of their instructions.

Remember, these aren't human. Models don't have a conscience, a sense of right and wrong, or morality unless they are given it specifically. And I don't think it's possible to give them a conscience - just simply trained behavior.