Public Accountability Initiative
July 21, 2009 . . . .
By Kevin Connor - Scribd.
As Goldman exec, Obama nominee played key role in Sudan-linked IPO
Despite human rights concerns, State Department nominee pushed through illegal PetroChina Offering
President Obama's recent nominee for undersecretary of state, Robert Hormats, is another in a long line of Goldman Sachs executives to secure influential posts in government. But his nomination deserves special scrutiny, above and beyond growing concern surrounding the bank's influence in government.
Hormats played a crucial role in a 2000 Goldman Sachs deal that was fervently opposed by religious groups and human rights advocates and later cited by the SEC as an example of illegal market manipulation: the $3 billion initial public offering of PetroChina, a company with ties to Sudan's genocidal regime.
Key facts concerning Hormats's role in the PetroChina IPO:
**With the PetroChina IPO facing significant opposition from human rights advocates, Hormats assured members of the press that no funds from the offering would be used for work in Sudan.
**These statements later proved to be inaccurate and misleading. Several large institutional investors, including Harvard, have since divested from PetroChina, citing human rights concerns.
**The SEC later cited Hormats's remarks as evidence of illegal market tampering, or "market conditioning," in a larger case against Goldman Sachs, which the bank settled for $2 million.
Hormats's role in the PetroChina deal raises serious questions about his fitness to serve in a post that will give him substantial influence over international economic policy and US-China relations.
**Illegal and deceptive financial practices. As a Wall Street executive, Hormats deceived investors and violated SEC rules in order to promote Goldman Sachs' interests in the PetroChina deal. With this record, can he be a credible advocate for sound international economic policy?
**China, Sudan, and human rights. By offering support for the PetroChina deal, Hormats flouted human rights and national security concerns as they pertained to China and Sudan. With this record, can he effectively represent US interests in managing US-China policy?
**Goldman Sachs and conflicts of interest. How will Hormats negotiate the conflicts of interest accrued during his time at Goldman Sachs?
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