THE ENVIRONMENT at global investment bank Goldman Sachs has been described as “toxic and destructive” in a barbed attack by a departing senior executive.
Greg Smith, former executive director at the US firm’s London office, said his colleagues “callously” talked about “ripping their clients off” and he regularly saw managing directors refer to their clients as “muppets”.
Mr Smith, who spent 12 years with the firm, made the accusations in a New York Timesarticle yesterday.
“To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”
He said the current senior management, chief executive Lloyd Blankfein and president Gary Cohn, had lost control of the firm’s culture and the decline in “moral fibre represents the single most serious threat to its long-run survival”.
Mr Smith, a South African who studied at Stanford University in California and who appeared in graduate recruitment videos for Goldman, said the bank now promoted anyone who made enough money and was “not currently an axe murderer”.
One way to get promoted at Goldman, according to Mr Smith, was to “hunt elephants”. This was “Goldman-speak” for getting clients to invest in products that would generate most profit for the bank, regardless of whether they suited the investor.
Mr Smith said he decided it was time to leave when he could “no longer look students in the eye and tell them what a great place this was to work”.
In response to the article, Goldman Sachs issued a short statement which said: “We disagree with the views expressed, which we don’t think reflect the way we run our business. In our view, we will only be successful if our clients are successful.”
One Goldman veteran said while he respected Mr Smith’s opinion, it had not been his experience of the bank during his time there.
Mr Smith’s public resignation letter is the latest blow for the 143- year-old firm, which has always attracted criticism for its links to the US political elite. It has been the subject of intense scrutiny since the 2008 financial crisis when it required $782 billion (€600 billion) in loans from the US authorities, although these were repaid in full.
It has also been accused of engineering schemes to help the Greek government hide the full extent of its debt burden.
Rolling Stonemagazine famously described the bank as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money".
In Ireland, Goldman is headed by former Irish rugby international Hugo MacNeill. It advised the Government on a debt-for-equity swap at Bank of Ireland, which reduced its debts by over €900 million. It was also an adviser on the investment in the bank by a private syndicate led by high profile US investor Wilbur Ross.
Former Attorney General and European Commissioner Peter Sutherland is chairman of London-based Goldman Sachs International.
