The Best Club in the World; Lord Browne: The Cultured Banker Once of Goldman Sachs and BP Joshua Bolten: US Treasury Simon Robertson: Rolls-Royce Gavyn Davies: Former BBC Chairman

The Evening Standard (London, England), November 20, 2007 | Go to article overview

The Best Club in the World; Lord Browne: The Cultured Banker Once of Goldman Sachs and BP Joshua Bolten: US Treasury Simon Robertson: Rolls-Royce Gavyn Davies: Former BBC Chairman


Byline: CHRIS BLACKHURST

AT GOLDMAN SACHS these days, there is reason to feel more satisfied thanusual. Of all the major players, the US-based investment bank seems to haveescaped lightly from the subprime crisis. With brilliant timing, Goldman isreputed to have unwound its exposure to the American homeowners with mortgagesthey might struggle to pay well ahead of their loan defaults.

Rivals at other houses may worry about their bonuses this yearthose at Goldman can rest assured, theirs are OK. The bank is thought to haveearned [pounds sterling]45 billion this year and the 26,000 employees are in line to receive$18 billion in bonuses.

Then there is John Thain, head of the New York Stock Exchange (NYSE) but aformer president of Goldman and a Goldman veteran to his polished wingtips,being parachuted in to save the oncemighty Merrill Lynch. In banking terms,it's the same as someone in the UK heavily identified with Tesco being asked torescue Marks & Spencer. It's not meant to happenit's a humiliating admission of failure by Merrill and confirmation, as ifneeded, of Goldman's total hegemony.

Goldman alumni are everywhere. Better known members include: Paul Deighton,charged with raising sponsorship for the 2012 Olympic Games; Lord Browne, onceof BP and Goldman; Peter Sutherland, the BP chairman; Simon Robertson, chair ofRolls-Royce; Gavyn Davies, who chaired the BBC after quitting Goldman; NoamGottesman and the other founders of the hugely successful GLG hedge fundbusiness.

The list goes on and on.

Ocado, the internet grocery service, was formed by three traders from Goldman.

Benchmark Capital, Europe's biggest venture capital providerit backed Bebo and Betfair is run by Mark Evans, for 15 years at Goldman.

When Highbridge Capital Management, the giant hedge fund majority-owned byanother bank, JP Morgan Chase, wanted someone to start a private equitydivision, it chose Scott Kapnick, former co-head of investment banking atGoldman.

Such is the extent of Goldman's reach that it was no surprise in New York thatThain's successor at the NYSE, Duncan Niederauer is a fellow Goldman alumnus.

In the US, Daniel Och who last week floated his $30 billion hedge fund is ex-Goldman. Another bank hit hard by the subprime fallout, Citigroup, hasappointed Robert Rubin, formerly of Goldman, to run it. The US Treasury isoverseen by Hank Paulson, once Goldman's chief, and he was hired by JoshuaBolten yes, you've guessed it.

It's not just commercial banksthe president of the World Bank, Robert Zoellick used to be at Goldman, as didthe heads of the Canadian and Italian central banks (in Italy, it's beenrepeatedly claimed that Goldman's representation is so strong throughout theadministration and upper echelons of society that the bank is effectively aquasi-government).

Right across the City, Wall Street and centres of financial and politicalpower, stretch the Goldman tentacles. Some extend to high profile positions.Others reach into the trading floors and corridors of banks and corporations.

Some say Goldman is too powerfulthat such is its domination, that conflicts of interest are bound to arise.They cite the $9 billion merger of the NYSE with electronic trading platformprovider, Archipelago, as a case in point. Goldman owned 15 per cent ofArchipelago, based in Chicago; it owns 21 seats on the NYSE; and Thain, theexchange boss who drove the marriage, was not only a former Goldman kingpin buthe still held shares in the bank. Goldman acted as broker to both the NYSE andArchipelago.

Papers filed in a lawsuit brought by dissident exchange members showed evenGoldman staffers were stunned that they could act for both. "Did you see theNYSE deal?" Brian Musto emailed a colleague, Elena McKee. "Yeah, did you workon it?" asked McKee. "Oh yeahfirst big deal. We advised both sides too," he wrote. "That's freaking amazingsame team of people on both sides? …

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