Setting aside, for a moment, whether we really need yet another senior Goldman Sachs executive in a big job in Washington, the nomination of Robert Hormats to be Undersecretary of State for Economic, Energy and Agricultural Affairs raises anew troubling questions about Goldman’s role in raising money for a Chinese oil company that helped finance the genocide in Darfur.
Hormats played a leading role in defending PetroChina (NYSE:PTR) when Goldman took the Chinese oil company public in 2000. Worse, Hormats’ statements at the time, which included assurances that money from the public offering would not flow to the Sudanese government, were later investigated by the Securities and Exchange Commission, which brought a case against Goldman that the company settled for $2 million. (Here’s a Washington Post story on the settlement.)
That’s not enough money, to be sure, to matter at Goldman, but still, it makes you wonder: How much due diligence did the Obama administration and Secretary of State Hillary Clinton do before nominating Hormats?
You’d think that misleading people about genocide might be sufficient cause to disqualify an executive, even one with impeccable Goldman ties, from a state department post.
Several nonprofit and human rights groups—the Genocide Intervention Network, Investors Against Genocide and the Public Accountability Initiative—have just reported on Hormats’ ties to PetroChina and Sudan. ABC News’ Jake Tapper blogged about the allegations in detail, and the issue is catching fire around the blogosphere. See this and this (from the FT.com) and this (from Matt Taibbi). Here’s the press release from the human rights groups.
In a letter to Senators John Kerry and Richard Lugar, who will hold confirmation hearings, Sam Bell of the Genocide Information Network and Eric Cohen of Investors Against Genocide ask that Hormats be questioned about:
1. His current view, in contrast to his view at the time of the IPO, of the dangers of investments in PetroChina helping to fund the regime in Khartoum.
2. His willingness, now, to make a clear and public statement recognizing that PetroChina is helping to fund atrocities in Sudan and to admit that his support of the IPO was a mistake.
3. Assistance he provided to PetroChina, allowing it to raise capital in the United States and subsequently help fuel the humanitarian crisis directed by the Government of Sudan.
4. Policies that he now considers would be prudent for financial institutions to adopt, so as to avoid the mistakes he facilitated during PetroChina’s IPO, and to avoid inadvertently connecting ordinary American investors to ongoing and future crimes against humanity and mass atrocities.
It will be fascinating to see what happens to this nomination. I don’t believe in Matt Taibbi’s conspiracy theories about Goldman (though his Rolling Stone takedown is a great read) but there’s no doubt that Goldman has enormous clout in Washington, no matter who is in power. (Employees of Goldman gave nearly $1 million to Obama’s presidential campaign in 2008, more than the employees of any other company.) Will Hormats be forced to explain himself? Shouldn’t financial institutions be held accountable, when they raise money for renegade companies? Shouldn’t we expect better than this from Wall Street? And the Obama team?
Photo credit: Council on Foreign Relations/Washington Post