When the Corona virus struck many countries tried to buy face masks. Finland’s National Emergency Supply Agency bought several million masks in March this year from a small company, only to discover that they were not what was ordered and the contract was promptly cancelled. It’s quite clear that the same company will not be used again. That would be a rational act by the Finnish government – you can imagine what would happen if they did!
However, there appears to be one meaning of rational when dealing with small companies, and another meaning of rational when dealing with big companies that can afford to employ expensive lawyers.
This week we have seen that one of the world’s largest investment banks, an American investment bank called Goldman Sachs, has agreed to pay the Malaysian government a sum of around €3 billion as compensation for the actions of their employees some 10 years ago when they arranged a bond issue for the government where the cash ended up in the wrong pockets.
Goldman Sachs did not admit to any guilt or wrongdoing when making this settlement to close the court action against them. The amount paid was to settle the case once and for all in the American justice system. The various media stories about the settlement was that Goldman Sachs ended up paying much less than what the Malaysian government was demanding, and that the both parties are now great friends, and business will be continued as usual. Politicians and individual bankers involved in the fraud are now facing criminal prosecutions, but it appears that the reputation of Goldman Sachs, according to media reports, is intact.
The big question is why should this bank be a banking partner for other governments and large corporations? Why are there no self-imposed sanctions being placed on this bank by governments and companies who are their regular clients?
Let’s go one step further – why are there no clear international or national rules or regulations governing what governments and big companies are allowed to do? Surely companies like Goldman Sachs have no monopoly on their business. There are plenty of banks willing to take over their business.
We already have strict rules on money laundering, and every big company is now talking about how much attention they pay to the UN’s Sustainable Development Goals… and what about the EU Taxonomy and other rules regarding corruption?
But when it comes to dealing with big companies like Goldman Sachs other norms appear to apply. Since Goldman Sachs has not admitted to any wrongdoing, must we pretend that the €3 billion payment was a really a charitable contribution and that your correspondent is just too simple to understand the complexities of business…
Well, let’s be clear – Goldman Sachs’ employees were involved in serious corruption, and there €3 billion was certainly not a charitable payment. How does the EU and other EU bodies including the European Central Bank and member states intend to deal with Goldman Sachs?
They can hardly claim that they are not aware of the this serious fraud involving Goldman Sachs, or are they just going to ignore the matter and continue dealing with this company as normal? Or are they admitting that there is indeed one rule for small crooks and another one for big ones!
Picture: Wikipedia – “1905 cartoon of Charlie Murphy as a prisoner – Caricature of Charles Francis Murphy (1858–1924), head of New York City’s Tammany Hall, that ran in the New York Journal on November 10, 1905. William Randolph Hearst, owner of the Journal and the 1905 Democratic candidate for mayor of New York, was defeated through electoral fraud perpetrated by Murphy’s organization. This drawing was was reprinted in Current Literature, Vol. 41, No. 5, October 1906, and appears on page 477 of the public domain file collected here at the Internet Archive.”