Corporate power, corporate criminality and secret lobbying: Goldman Sachs

It has not been a good couple of weeks for Goldman Sachs.

A report by a bipartisan US Senate Committee  into US investment banks has recommended criminal charges be bought against Goldman Sachs . Goldman Sachs and other Wall St firms were described by the Senate Report  as a "financial snake pit rife with greed, conflicts of interest, and wrongdoing." 

Goldman Sachs, the nation's fifth-largest bank by assets, systematically misled clients, sold them financial instruments it knew to be junk, bet against them and profited off of their losses, according to a Senate report released this week.

The report, the product of a two-year investigation, paints the firm as Exhibit A of Wall Street's evolution from a place that raises and deploys capital to worthy businesses into a vulturous creature that preys on unwitting investors.

Goldman's conduct in the two years leading up to the near-implosion of the financial system show a firm dedicated to "sticking it to their own clients," said Senator Carl Levin, a Michigan Democrat who chairs the panel that produced the report. "Goldman gained at the expense of their clients, and used abusive practices to do it."

In the UK a  report published  by SpinWatch UK  exposes  Goldman Sachs political and financial lobbying muscle in the UK and Brussels (The European Parliament).

The report, entitled, Doing God’s Work: How Goldman Sachs Rigs the Game details Goldman Sachs’ secret lobbying activities in the UK and Brussels and links to politicians. It exposes:

• The extensive links between Goldman Sachs and the Conservative Party;
•   Political donations totalling £8.5million to British politicians in the past decade from Goldman and ex-Goldman people;
•    Goldman Sachs’ immense lobbying machine in Brussels, including active membership of over a dozen financial sector lobby groups;
•    Extensive meetings between Goldman Sachs and Conservative MEPs including: 9 meetings in six months with a key MEP on the Parliament’s Economics and Monetary Committee; and a total of 36 meetings between just four Tory MEPs and Goldman Sachs, its lobby groups or PR companies acting on their behalf;
•   The bank’s lobbying campaign to undermine political reform on derivatives and alternative investment funds including: private dinners and unminuted "after office hours” meetings, high-level conferences and targeted campaigns to Commission officials, MEPs and their assistants;
•   How Goldman Sach’s lobbyists tried to undermine amendments in a key report on derivatives, seen as “financial weapons of mass destruction”; 
•   The bank’s lobbying enabled them to gamble on food futures and drive up prices.

Report author, journalist Andy Rowell said: “A year ago, David Cameron said that lobbying was the next big scandal waiting to happen. This report shows that banks like Goldman Sachs – who are intricately connected to the Tories – continue to lobby to get what they want."

Rowell continued: "The entire regulatory process - and the lobbying activity that surrounds it - has to become significantly more transparent and accountable. If it is allowed to be captured by bankers, the next financial crisis will only be a matter of time.”

When Democracy is beholden to corporate power

"Inverted totalitarianism marks a political moment when corporate power finally sheds its identification as a purely economic phenomenon, confined primarily to a domestic domain of "private enterprise", and evolves into a globalizing co-partnership with the state..... The former becomes more political, the latter more market oriented"

Sheldon Wolin, Democracy Inc: Managed Democracy and the Specter of Inverted Totalitarianism

In a recent speech in London the CEO of Rio Tinto made a direct threat to elected governments around the world. His message was clear- challenge the power of the mining and resources multinationals by threatening their interests and the industry will do what was done to Kevin Rudd, the Australian Prime Minister.

It is remarkable that with a few exceptions there has been little serious analysis or anger in this country about the stark reality that a powerful industry, a number of multinational corporations and some of the wealthiest Australians could use their money and power to unseat a democratically elected Prime Minister.

One exception is an article in the Age by David McKnight in which he asks- who is actually running this country? His answer is corporate power.

In the article below Gavin Mooney, the co convener of the WA Social Justice Network, writes about the speech by the Rio CEO and the mining industry's use of its corporate power.

A PS to the RSPT
By Gavin Mooney

The ‘debate’ around the super profits tax has been illuminating. For me it has said so much about the mentality of the top executives in the mining sector - and of politicians. Early on there were the suggestions that Kevin Rudd was a communist (Clive Palmer), that it amounted to nationalisation (Andrew Forrest) and the tax was straight from the pages of Das Kapital (Julie Bishop)

In the wake of their success in bringing down both Rudd and the tax, their arrogance and their indifference to democracy is now out there in full flow. According to Forrest it wasn’t the miners who brought down Rudd – Twiggy’s pal – it was Ken Henry. Atlas chief David Flanagan divulges to The Australian that he would talk to his wife each night about the implications of the tax ‘and the legacy it would leave for their two children’. He went on: ‘I actually could see a scenario where the RSPT could destroy the fabric of the Australian economy… I mean, totally f…ing smash it to bits.’

Forrest asked ‘who voted for Ken Henry?’ Thank God for Forrest to alert us to the dangers of an unelected Ken Henry. And thank God for those who brought down the tax and saved us from these commies who were otherwise set to ‘destroy the social fabric’ of Australia.

These mining giants also have global aspirations. They are keen to use their power to save not just Australia. They want to save the world from nasty governments elsewhere as well! In a speech to mining executives in London last week, Tom Albanese, the Rio Tinto CEO, according to Peter Wilson in The Australian, ’issued a none-too-subtle warning about the events in Canberra to other governments attracted to the idea of “resource nationalism” and hiking taxes on mining profits’. Albanese is reported to have stated: ‘Policy makers around the world’ (and presumably that includes democratically elected governments – like ours) ‘can learn a lesson when considering a new tax to plug a revenue gap, or play local politics’. We are fortunate however that as Wilson reported Albanese ‘held back from openly crowing about the fall of Mr Rudd’.

The Fin Review joined in. ‘In a shot across the bows of Brazil, South Africa and Chile’, writes Andrew Cleary, ‘Rio Tinto’s chief executive Tom Albanese, has warned countries considering a super tax on resources to “learn a lesson” from the Australian government’s experience in dealing with the industry’s opposition’.

I would encourage readers to write to The Australian and the Fin Review to express their thanks to the big miners for saving – today - the social fabric of Australia yesterday and – tomorrow - the world. Good chance your letters will be published.

Against this background what chance any reasoned debate about the impact of the mining industry on global warming? Ah, but the Flanagan kids’ future is secure in the knowledge that their dad and the other big miners are there to look after the future of all of us.

And just a final thought: why do we need an election?