Why should Goldman Sachs financing 1Malaysia Development Berhad (1MDB) be worse than it financing Venezuela’s Maduro’s regime?

David Crow and Laura Noonan in an FT The Big Read write, “Goldman is under increasing scrutiny over its role in underwriting $6.5bn of bond offerings for 1MDB in 2012 and 2013, a service for which it reaped a hefty $600m in fees and trading gains. After the money was raised, $2.7bn was allegedly siphoned off by the Malaysian financier Jho Low, who is accused of masterminding the fraud, to pay for a lavish lifestyle and to bribe Malaysian officials.” “Tim Leissner: Goldman Sachs banker at the heart of 1MDB scandal” December 24.

Sir, why should this operation be considered so worse than when, in May 2017, Goldman Sachs, Lloyd Blankfein approved to hand over about US$800 million to the notoriously corrupt, criminal and human rights violating government of Venezuela’s Maduro?

GS, in exchange for their money obtained $2.8billion Venezuelan bonds paying a 12.75% interest rate, which if repaid would provide GS with about a 42% yearly return, 2.000% more than what US pays. Is that not bribing foreign government officials and should therefore perhaps fall under the Foreign Corrupt Practices Act of 1977?

With respect to money being siphoned off, if anyone in GS doubts that much of that loan did not go the same route, then the days of GS are soon over. Such naiveté does not survive in the world of finance.

We are now in December 2018, and still not the slightest sign of a "Sorry Venezuelans" from Lloyd Blankfein. An elite, aware of its true responsibilities, would be shaming Lloyd Blankfein… and surely not inviting him to their homes. 

@PerKurowski

If elites do not socially sanction those they should sanction, there’ll be no society left to sanction.

Sir, Laura Noonan writes “Goldman Sachs is considering a special surveillance programme to monitor higher-risk employees in far-flung locations so the bank can demonstrate that “lessons have been learnt” from the 1MDB scandal” “Goldman eyes monitoring of high-risk staff after 1MDB”, December 3.

Great, but they should also monitor high-risk bosses in home office locations, like Mr. Lloyd Blankfein. And I here refer to that lending by him and Goldman Sachs to a notoriously inept, notoriously corrupt, notoriously human rights violating regime of Venezuela’s Maduro.

Do I want Goldman Sachs’ Lloyd Blankfein to be punished by the justice? No! I much prefer the elite; universities, media among others should do that, shaming him, by socially sanctioning him, by for instance not inviting him to anything.

Sir, do not give Lloyd Blankfein, or an unrepentant Goldman Sachs, one inch more of space in the Financial Times, they do not deserve it.

PS. To this date Lloyd Blankfein has not been able to find in himself to utter the slightest “I’m sorry Venezuelans”.

PS. But perhaps justice might also have a bone to pick with Blankfein.

@PerKurowski

Any banker, like Goldman Sachs’ Lloyd Blankfein, who does not ask the borrower “What are you going to use the money for?” should not be allowed to be a banker.

Sir, David Crow and Laura Noonan, with respect to the Malaysian financier-cum-socialite known as Jho Low scandal that I know nothing about write, “Goldman has always maintained that it did not know how the proceeds of the bond offering were spent” “Blankfein revelation piles pressure on Goldman”

I guess just like Lloyd Blankfein was not interested in how that notoriously human rights violating regime of Maduro’s in Venezuela was going to use the funds Goldman Sachs provided it, because all he cared about was whether the risk premiums were juicy enough to support his bonus aspirations.

Sir, again, corrupting not some government official but the regime itself, by offering fresh money in return for the possibility of huge returns, sounds to me like something quite punishable by US’s Foreign Corrupt Practices Act (FCPA).

We are now in November 2018, and Mr Blankfein has not found it within himself to yet utter the smallest “Venezuelans, I am so sorry”

Sir, what kind of elite do we have when a Lloyd Blankfein still gets invited to all kind of academic and social engagements? If the elite gives up on holding their own accountable, it is lost. 

@PerKurowski

Goldman Sachs’ Lloyd Blankfein has also a big question to answer us Venezuelans.

Sir, Brooke Masters writes that when “Sued by the US Securities and Exchange Commission over allegations it had misled clients about mortgage-backed securities… Lloyd Blankfein… launched a top-to-bottom cultural review and spent 18 months visiting clients to reassure them that Goldman had got the message on ethics.” “Goldman Sachs has big questions to answer” November 7.

So Masters rightly asks so what happened as “Last week, the US Department of Justice revealed that two former senior Goldman bankers had been criminally charged with helping to loot 1MDB, a Malaysian state investment fund that authorities allege was victim of one of the biggest frauds of all time.”

Sir, I have my own question. After Mr Blankfein’s much-touted ethics revamp in 2011, what on earth was he doing lending, in May 2017, to a notoriously human rights violating odious regime, namely Venezuela’s Maduro’s?

In fact, as I see it, corrupting not some government official but the regime itself, by offering fresh money in return for the possibility of huge returns, sounds to me as something quite punishable by US’s Foreign Corrupt Practices Act (FCPA).

We are now in November 2018, and Mr Blankfein has not found it within himself to yet utter the smallest “Venezuelans, I am so sorry”

Sir, what kind of elite do we have when a Lloyd Blankfein still gets invited to all kind of academic and social engagements?

@PerKurowski

The risk premiums for a suspect of human rights violating nation will increase, which, sadly, will also attract investors

Sir, Gillian Tett, with respect to how business should or could behave in cases of human rights violations, like that of Khashoggi, if confirmed, writes: “since western businesses are scrambling to maintain their investments there at a time of rising Sino-American tensions. “What will we do the next time that the Chinese toss dissidents in jail or clamp down on local journalists?” asks one chief executive. The answer is not clear.” “The Khashoggi case puts US businesses in a moral bind”, October 19.

How much has the risk premiums required by anyone wanting to invest in Saudi Arabia gone up after the Khashoggi incident, and after how Saudi Arabia reacted against Canada when its Foreign Affairs Minister Chrystia Freeland tweeted concerns about the news that several social activists had been arrested in Saudi Arabia? These must have increased a lot, and an initial public offering of the Saudi oil giant Aramco is rumored cancelled.

That costs of course the human rights violating nation a lot… but those higher risk premiums also attract… as we can notice when a Goldman Sachs finances a notorious human rights violating regime like Venezuela’s Maduro’s.

The answer to the chief executive’s what to do question, should have to include “what our shareholders have mandated us”. Unfortunately too many shareholders also turn a blind eye to ugly realities, when for instance a Goldman Sachs announces record returns on equity.

What do we lack? Perhaps the will of a responsible elite that is willing to shame those who behave in a disgraceful manner, in a completely apolitical way. We need a society whose members would not invite Goldman Sachs’ Lloyd Blankfein to have tea at their homes. 

Sir, I have not been able to find the reference to it on the web but, some years ago, in Swedish television, I remember having heard something about a Swedish king who said he feared more the opinions of Stockholm’s high societies ladies than Russia. 

@PerKurowski

2006 and 2007, in Op-eds on Venezuela, I already had to reference Rwanda. That’s how late it is.

Sir, Luis Almagro writes, “As an international community, we have failed to live up to our responsibilities in Venezuela… We must address the corruption that is starving an entire country’s population, and provide humanitarian assistance to those who are desperately in need. We must act — it is already too late” “The world has a responsibility to protect the people of Venezuela”, September 28.

How can we Venezuelan’s not be extremely thankful for Luis Almagro’s support in the OAS? For a full decade, 2005-2015, we had to suffer Almagro’s predecessor José Miguel Insulza’s shameless silence on what was going on in Venezuela, even his support of its regimes and its buddies.

When Almagro now refers to former US president Bill Clinton once telling the people of Rwanda: “all over the world there were people like me sitting in offices, day after day after day, who did not fully appreciate the depth and speed with which you were being engulfed by this unimaginable terror”; I must point out that already 2006 and 2007 in two Op-Eds published in Venezuela’s leading newspaper, El Universal, before I was censored by the government friendly new owners’ of that paper, I had to refer to Rwanda. That’s how late this all is.

In 2009, in a similar Op-Ed, addressed to OAS and its Inter American Commission of Human Rights (IACHR) I put forward the case that when gasoline, in a country with so many needs, was basically given away for free, an odious violation of economic human rights was being committed. 

In July 2015, I formally denounced that to IACHR, ending my accusation with: “Let me assure you right now, at this moment, the official price of a liter of milk is around 300 times higher than the price of a liter of gasoline ... and if that is not an economic crime against humanity, what is?”Sir, I am still waiting for a response.

@PerKurowski

For some, Lloyd Blankfein will be not kindly remembered and one of those who financed Venezuela’s Nicolas Maduro

Sir, Robert Armstrong, Laura Noonan and Arash Massoudi write that “Mr Blankfein may be remembered as the last leader of a Goldman Sachs that ruled Wall Street and the first leader of a sedate provider of financial services” “Blankfein’s legacy still up for grabs at Goldman” July 17.

Many, or at least some of us Venezuelans, will with fury remember Goldman Sachs’ Lloyd Blankfein, as one that helped finance a regime that publicly and notoriously violates human rights.

I just wonder if the Britain of Financial Times had had a regime like that of Nicolas Maduro, what is it would be saying of the legacy of someone who had helped to finance it? “Doing God’s work”? Well definitely not my God’s Sir.

Or is it too political incorrect for the elites to hold one like Lloyd Blankfein accountable for his doings? If so, what truly poor elites the world has to count on.

@PerKurowski

Know the difference between ordinary private sector citizens and corporate leaders engaged in crony statism.

Sir, Rana Foroohar writes about “a role for corporate leaders who think about more than share prices… Some are calling on the private sector to take up the mantle of US leadership.” “Business can fill the leadership vacuum” August 21.

Boy, the aspiring Bill Gates and Mark Zuckerbergs of this world just got to love her. But, as I see it, many corporate leaders do not really belong to the ordinary real private sector, they are too much often just representatives and members of the crony-statism sector… as in “I called up Mike Spence, [then governor] reminded him the we were the biggest tech employer…”

Look for instance at those big banks loving it when they can leverage their equity manifold lending to “the safe”, like sovereigns and the AAA rated, and express no concerns at all with the fact that this stops them from lending sufficiently to the SMEs and entrepreneurs.

Do I disagree with Marc Benioff, head of Salesforce, when he states: “CEOs have to be responsible for something more than their own profitability. You have to serve a broader group of stakeholders — from employees to the environment — and when politicians don’t get things right, corporate leaders have to act”? Absolutely not! They have all the right to do so… but, any strengthening of corporatism, should also come with the label: “Warning, allowing corporate leaders to speak out too much for the ordinary private citizen’s interests, might be very dangerous for the health of society.”

PS. As another example look at a Goldman Sachs’ Lloyd Blankfein selling himself of as a responsible citizen, while at the same time he approves of financing dictators that odiously violate human rights. 

@PerKurowski

Could the Venezuelan National Assembly sue Goldman Sachs on behalf of Venezuelans for aiding and abetting a dictator?

Sir, Mitu Gulati writes: “a judge could find that the holders of Maduro bonds must have known that they were transacting with an unrepresentative or illegitimate agent of the people… Agency law goes beyond merely voiding the contract between the principal and the third party; a third party who suborns a betrayal of trust by the agent may be answerable in tort to the principal”, “Maduro bonds” Alphaville July 8.

So, could the Venezuelan National Assembly sue Goldman Sachs on behalf of Venezuelans for aiding and abetting a dictator and the violation of human rights?

Gulati also writes: “It is the Constituent Assembly itself and all of its works that the post-Maduro government must argue are unauthorized, invalid and illegitimate. And the longer that the Constituent Assembly stays in power, and makes the laws of the country, the more it begins to look like the real legislature”

That begs the question, if a President of USA, like Donald Trump had managed to create something as odiously farcical as Venezuela Constituent Assembly, how long would it take for it to begin to look like the real legislature? 100 years?

PS. A simple but complex question from a humble Venezuelan economist to an outstanding Venezuelan international lawyer

@PerKurowski

Like social bonds’ growth the antisocial bonds’ seem also to be doing fine

Sir, Kate Allen writes: “a host of other financial products have begun to emerge, promising to tackle social issues including homelessness, access to education, clean water, crime prevention and helping disadvantaged children…. The market is still small — just $3.5bn of social bonds were issued in the second quarter of 2017” “Ethical investing branches out from green roots” July 18.

And small it might really be when comparing to all of the antisocial financing that goes around. As an example just in that quarter the Maduro government of Venezuela, that one who is publicly and notoriously violating human rights and has its people starving and dying because of lack of food and medicines, sold $2.8bn in bonds. These antisocial bonds were initially picked up for a mere $800 million by a “with those possible returns, why should we give a shit about ethics”' Goldman Sachs.

Allen points out the fact that “The [social] bonds must perform socially as well as financially.” Yes, and if they don’t perform socially, as is clearly the case with Venezuela, then they should not perform well financially either. The Western civilization has an obligation to put a stop to odious anti-social financing. Otherwise our heirs will end up having to refer to that civilization as a once was.

Hopefully we will see an important socialite publicly disinviting a seemingly totally unrepentent Lloyd Blankfein from an important social event, because of Venezuela.

PS. I wonder how much $ in bonuses Blankfein will receive from this operation.

@PerKurowski

How does the social sanctioning of Maduro’s financiers compare to that of Trump’s bad taste Joe/Mika tweet?

Sir, John Paul Rathbone in reference to the helicopter event in Venezuela writes: in “a plot twist barely worthy of a B-movie… whatever actually happened, one thing is clear: Mr Maduro, nearly half of whose cabinet members are generals, now has an excuse to repress more.” “Venezuela’s B-movie drama is moving from farce into tragedy” June 30.

Really, is that an excuse? Really, do you think anyone declaring: “If we cannot win with votes we will win with weapons” (which is what Maduro really said) need an excuse?

Sir, and let us be more precise. Venezuela moved from farce (if ever it was a farce) to tragedy a long time ago. Just ask the 2 million, out of 32, who had already have had to migrate to foreign lands, abandoning friends and family.

There is currently an incredible amount of social sanctioning of Donald Trump because of his “Psycho Joe” – “Crazy Mika” tweet. Rightly so, but Trump’s bad taste tweet represented no crime against humanity and, when compared to Venezuela’s Nicolas Maduro, he is clearly more of a Church Boy.

So, comparatively speaking there has been extraordinary little sanction of those who, incapable of resisting juicy margins, finance the Maduro government, like Goldman Sachs. For instance, how many have closed out their accounts at Goldman Sachs or how many have disinvited Lloyd Blankfein from a social event?

Sir, when an elite becomes incapable of sanctioning one of its own, reality will come back and bite it.

PS. Watching my inbox fill up with solicitations of donations in order to fight Trump, every time he puts his foot in the mouth, which should indicate these mess-ups are strong motivators, indicates some could have a deep love-hate relationship with him.

PS. Goldman Sachs, Lloyd Blankfein. Want to see how your client Maduro teargasses young Venezuelans in a closed truck?

@PerKurowski