SA man trashes top US bank
LONDON: A South African senior executive at Goldman Sachs has launched a scathing attack on the US investment bank in a letter of resignation published in the New York Times yesterday.
Under the headline “Why I am leaving Goldman Sachs”, Greg Smith wrote that the bank had become a “toxic and destructive” place where managing directors openly referred to their clients as “muppets.”
His letter set off a blizzard of comments on Twitter and other social media worldwide.
The London-based banker had spent 12 years at the bank and yesterday was his last day as executive director and head of the firm’s US equity derivatives business in Europe, the Middle East and Africa.
“Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore,” Smith said in the article.
“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets’,” Smith said.
“The interests of the client continue to be sidelined in the way the firm operates and thinks about making money,” Smith wrote.
“My proudest moments in life – getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics – have all come through hard work, with no shortcuts.”
“I hope this can be a wakeup call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist.”
Goldman Sachs issued a short statement in response:
“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. This fundamental truth lies at the heart of how we conduct ourselves.”
Calls to Smith were referred to the bank’s press office.
Smith’s resignation letter captured the imagination of Twitter. “Greg Smith” was a worldwide trending topic, meaning it had suddenly spiked in interest, while both that and “Goldman Sachs” were trending in the US.
While many of the commentators expressed surprise about the allegations in the piece, others called for Smith to shed light on why he left the bank, or pointed out that he seemed to have been employed in a comparatively junior role.
Goldman Sachs has in recent years faced a series of high-profile incidents potentially damaging to its image after the near-collapse of the global banking system in the middle of 2007.
One of its bankers, Fabrice Tourre – who referred to himself as “fabulous Fab” in e-mails – is still embroiled in legal claims in the US after allegations that he duped buyers in a complex mortgage-linked derivative deal.
And two years ago, the chief executive Lloyd Blankfein caused a media storm when he said that as a banker he was just “doing God’s work”, defending high banker pay and the role their institutions play in the economy.
Earlier this month, Goldman Sachs’s public relations chief Lucas van Praag left after many years in the job, and was replaced by Richard Siewert, a veteran of the Clinton and Obama administrations.
Van Praag was known for defending Goldman executives’ actions and their multimilliondollar pay packages, often telling reporters in public statements that their stories were half-baked or unintelligent.
Siewert’s appointment came as the broader financial industry faces protests from groups such as Occupy Wall Street and is under continuous pressure from regulators after the financial crisis.