Goldman sex! ‘God’s bank’ off loads vice link shares

GOLDMAN Sachs – whose boss once claimed it was ‘doing God’s work’ – has been exposed as investing in a company linked to prostitution and sex trafficking of underage girls.

The revelation plunged the U.S. investment bank into fresh embarrassment over its business ethics weeks after a former executive claimed bosses there called clients ‘muppets’.

It has emerged that a private equity fund run by the bank had taken a major stake in a secretive company called Village Voice Media.

It owns a classified advertising website – Backpage.com – that is accused of being the biggest forum for illegal sex trafficking of underage girls in America.

GS Capital Partners III said it had agreed to sell its 16 per cent stake in the media company, admitting it had lost much of its investment in the process. Goldman Sachs insisted it had grown ‘uncomfortable with the direction of the company’ and its inability to influence its direction.

However New York Times columnist Nicholas Kristof, who exposed the connection, said the bank had been ‘mortified’ when he first inquired about its stake last week and ‘began working frantically to unload its shares’.

Backpage.com is estimated to have a nearly 80 per cent share of online prostitution advertising in the U.S., worth some £2.5million a month.

It also hosts advertising forums in at least a dozen other countries including the UK.

In Britain, it is used by hundreds of prostitutes across 19 cities and regions, ranging from Devon and Hampshire to Sheffield and Aberdeen. Pimps reportedly use the website to peddle underage girls, using euphemisms such as ‘petite’ to provide potential clients with a clue to their real age.

There have been growing calls in the U. S. for the owners of Backpage to drop the ‘ adult’ classified section.

Critics including prosecutors, politicians and religious leaders say many of the adverts for so-called

‘Toxic and destructive’

escorts are soliciting sex with children, who are sometimes substituted at the point of sale for the adults who have been pictured.

But anti- sex trafficking campaigners have been hampered in their efforts because Village Voice Media is privately owned and doesn’t have to reveal its owners.

Goldman Sachs invested £19million in Village Voice, an alternative New York newspaper, in 2000 and the stake was converted into a 16 per cent minority stake when the publication merged with another media company, New Times Inc, in 2006.

Since then a Goldman managing director, Scott Lebovitz, has had a seat on the board of the new company.

Village Voice Media has rejected demands to close down its adult adverts section, insisting the advertising would simply move offshore and outside the jurisdiction of U.S. authorities.

The company said it was co-operating with investigators and had reported 2,695 cases of suspected child trafficking to officials in 2011.

Goldman Sachs – once memorably described as a ‘great vampire squid’ sucking up money from wherever it could – has an unenviable reputation as one of the banking world’s greediest players.

That image was reinforced last month when Greg Smith, a Goldman Sachs executive director, resigned with a stinging attack on its ‘toxic and destructive’ culture.

He said the bank regularly put its own financial interests before those of its clients, whom bank bosses frequently dismissed as ‘muppets’.

Goldman Sachs chief executive Lloyd Blankfein claimed in 2009 that bankers were doing ‘ God’s work’. He was speaking after the bank had provoked anger by revealing it planned to lavish a record £13.4billion in pay and bonuses on its staff.

Defending the move just 12 months after bankers brought the world’s economy to the brink of collapse, Mr Blankfein said modern banking performed a vital function and described himself as just a banker ‘doing God’s work’.

‘We’re very important,’ he said. ‘We help companies to grow by helping them to raise capital.

‘Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose.’