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Should Kurdistan Regional Government trust Goldman Sachs to under write a billion dollar bond?
7/20/2015
In the past couple of months, I have written on Ekurd web site about Kurdistan Regional Government (KRG) regarding the billion dollar bond/loan that they are seeking. In my previous writings, I had suggested to the KRG to do their due diligence when dealing with this very important issue. It remains to be seen if my advice will be heard or neglected.
There are many problems with the Billion dollar loan that the KRG is trying to borrow and now, as of today, I am reading ( see link below) that the same bankers, Goldman Sachs, that are “helping” the KRG finding investors have had such corrupt dealings before! Goldman Sachs was the investment banker that under wrote a $2.8 Billion for Greece in 2001. According to the article, Goldman Sachs “played/cooked” the numbers for Greece in order to get this loan done. In the process, Goldman Sachs made $793 Million in “fees” ( see excerpts below) and all while Greece’s debit more than doubled due to this dishonest/corrupt transaction. It is easy to see that Goldman did not care what will become of this corrupt loan as long as they made their money. Will the KRG fall for this trick/scam, as the Greece had done before them?
Excerpts from the article, written by former Secretary of Labor, Dr. Robert Reich now is the Chancellor’s Professor of Public Policy, University of California at Berkeley.
“For its services, Goldman received a whopping 600 million euros ($793 million), according to Spyros Papanicolaou, who took over from Sardelis in 2005. That came to about 12 percent of Goldman’s revenue from its giant trading and principal-investments unit in 2001–which posted record sales that year. The unit was run by Blankfein.
Then Goldman Sachs came to the rescue, arranging a secret loan of 2.8 billion euros for Greece, disguised as an off-the-books “cross-currency swap”–a complicated transaction in which Greece’s foreign-currency debt was converted into a domestic-currency obligation using a fictitious market exchange rate.
Goldman Sachs and the other giant Wall Street banks are masterful at selling complex deals by exaggerating their benefits and minimizing their costs and risks. That’s how they earn giant fees. When a client gets into trouble–whether that client is an American homeowner, a US city, or Greece–Goldman ducks and hides behind legal formalities and shareholder interests.
Borrowers that get into trouble are rarely blameless, of course: They spent too much, and were gullible or stupid enough to buy Goldman’s pitches. Greece brought on its own problems, as did many American homeowners and municipalities.”
Why would Goldman Sachs treat the KRG any differently than Greece? Should the KRG trust this them to under write this bond? I think the KRG needs to turn to others, hopefully more honest, for advice when it comes to borrowing money from international investors and not trust what Goldman Sachs is telling them. It will not be easy for the KRG to succeed in convincing banks in issuing this billion dollar bond (see link below) but there are other ways to get this deal done if the KRG would explore and consider. Sadly, I do not see anyone within the KRG, especially the Finance Minister, Rebaz Hamlan, that is qualified to discuss this complicated subject with!
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7/20/2015
In the past couple of months, I have written on Ekurd web site about Kurdistan Regional Government (KRG) regarding the billion dollar bond/loan that they are seeking. In my previous writings, I had suggested to the KRG to do their due diligence when dealing with this very important issue. It remains to be seen if my advice will be heard or neglected.
There are many problems with the Billion dollar loan that the KRG is trying to borrow and now, as of today, I am reading ( see link below) that the same bankers, Goldman Sachs, that are “helping” the KRG finding investors have had such corrupt dealings before! Goldman Sachs was the investment banker that under wrote a $2.8 Billion for Greece in 2001. According to the article, Goldman Sachs “played/cooked” the numbers for Greece in order to get this loan done. In the process, Goldman Sachs made $793 Million in “fees” ( see excerpts below) and all while Greece’s debit more than doubled due to this dishonest/corrupt transaction. It is easy to see that Goldman did not care what will become of this corrupt loan as long as they made their money. Will the KRG fall for this trick/scam, as the Greece had done before them?
Excerpts from the article, written by former Secretary of Labor, Dr. Robert Reich now is the Chancellor’s Professor of Public Policy, University of California at Berkeley.
“For its services, Goldman received a whopping 600 million euros ($793 million), according to Spyros Papanicolaou, who took over from Sardelis in 2005. That came to about 12 percent of Goldman’s revenue from its giant trading and principal-investments unit in 2001–which posted record sales that year. The unit was run by Blankfein.
Then Goldman Sachs came to the rescue, arranging a secret loan of 2.8 billion euros for Greece, disguised as an off-the-books “cross-currency swap”–a complicated transaction in which Greece’s foreign-currency debt was converted into a domestic-currency obligation using a fictitious market exchange rate.
Goldman Sachs and the other giant Wall Street banks are masterful at selling complex deals by exaggerating their benefits and minimizing their costs and risks. That’s how they earn giant fees. When a client gets into trouble–whether that client is an American homeowner, a US city, or Greece–Goldman ducks and hides behind legal formalities and shareholder interests.
Borrowers that get into trouble are rarely blameless, of course: They spent too much, and were gullible or stupid enough to buy Goldman’s pitches. Greece brought on its own problems, as did many American homeowners and municipalities.”
Why would Goldman Sachs treat the KRG any differently than Greece? Should the KRG trust this them to under write this bond? I think the KRG needs to turn to others, hopefully more honest, for advice when it comes to borrowing money from international investors and not trust what Goldman Sachs is telling them. It will not be easy for the KRG to succeed in convincing banks in issuing this billion dollar bond (see link below) but there are other ways to get this deal done if the KRG would explore and consider. Sadly, I do not see anyone within the KRG, especially the Finance Minister, Rebaz Hamlan, that is qualified to discuss this complicated subject with!
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