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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, May 17, 2011

The Ever Lovin' Revolving Door of Goldman Sachs!

Three leadership positions are now available in the world: chief economist of the SEC, a new head (possibly) of the IMF and president of the European Central Bank . For each position, a Goldman Sachs guy has been put forward as a candidate. However, I get the impression that an affiliation with Goldman Sachs may not be the positive symbol of success that it once represented.

According to Reuters, six candidates have been put forward for the SEC top economics job. The Goldman Sachs employee was not named "out of concerns for his privacy."

The Governor of the Bank of Canada, Mark Carney, whose name is being bandied about as a possible candidate for head of the IMF was, of course, a former employee of Goldman Sachs for 13 years.

Finally, Mario Draghi, former manager at Goldman Sachs (2002- 2005) has been put forward as ECB president. Here is what Simon Johnson says about that:

Mario Draghi and Goldman Sachs, Again
By Simon Johnson - HuffPost Business

In its previous response to us, the Bank of Italy pointed out that Mario Draghi (its current governor) did not join the management of Goldman Sachs until 2002 - hence he was not there when the controversial Greek "debt swaps" were arranged.

We agree that he joined Goldman only in January 2002 (this was in our original post). But the latest revelations regarding the Goldman-Greece relationship (on the Senate floor, no less) clearly indicate that Goldman was a lead manager of Greek debt issues in spring 2002, i.e., when Mr. Draghi was on board.

This raises three entirely reasonable and straightforward questions.

  1. Was Mr. Draghi involved in the Goldman-Greece relationship? Sources indicate that this was very much part of his set of responsibilities, but this may be disputed.
  2. If Mr. Draghi was involved in marketing Greek debt, did he at that time know the true Greek debt numbers - i.e., was he aware of the "debt swap" arrangement? Perhaps his Goldman colleagues concealed that information from him.
  3. And when/if Mr. Draghi became aware of the inherent misrepresentation involved this transaction, did he take steps to fully informed investors (and any relevant regulatory bodies)? Again, it is entirely possible he learned of this matter only recently and from the newspapers.
Keep in mind that Mr. Draghi is still regarded as a leading contender to become president of the European Central Bank - the most important policymaking institution in the eurozone. It will be hard for anyone to advance his candidacy without clear and public answers to these questions.
Read the article here

PS: Mario Draghi (formerly of Goldman Sachs is now the head of the ECB as of November 2011.

PPS: Christine Lagarde is the new IMF boss.

PPPS: Mark Carney is the new FSB boss.


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