Gary Cohn channels Goldman minus self-awareness

Fri, Dec 04, 2020 – 5:50 AM

New York

FOUR years after leaving Goldman Sachs, Gary Cohn seems to have retained the Wall Street firm’s sharp elbows. The former chief operating officer is reluctant to return a bonus of around US$10 million as atonement for Goldman’s 1MDB scandal, which happened when he was a senior executive. It’s not a good look.

Current and past leaders of Goldman were asked to give back US$174 million in October as part of a collective mea culpa for the firm’s role in raising money for a Malaysian government fund that was later misappropriated. Mr Cohn, who cashed in his awards in 2016 before going to work for US President Donald Trump, still hasn’t agreed to give back his portion, according to a person familiar with the situation.

It makes Mr Cohn look at best tin-eared. His firm screwed up on his watch. And the amount is chump change for him. At his departure from Goldman – on top of what he made in all the years he worked there – he collected some US$65 million.

His new investment vehicle, Cohn Robbins, is worth US$1 billion; he and his fellow backers stand to own as much as one-fifth.

It doesn’t look good for Goldman either, which likes to see its staff as “culture carriers”.

Reputational damage

Mr Cohn could always argue he’s doing what Goldman does so well: taking maximum advantage of what’s legal. He is under no obligation to return the funds. Doing so could even make it look like he takes responsibility for 1MDB, when there is no suggestion he was aware of any misbehaviour.

But Goldman itself has learned that being hard-headed isn’t always worth the reputational damage. There’s the time it backed down from a plan to delay UK bonuses so that it could exploit the timing of a tax cut in 2013. Or there’s the so-called “spank from Hank” in 2006, when then-boss Henry Paulson admonished staff for exacerbating conflicts of interest between Goldman’s dealmakers and investment arm.

Under current chief executive David Solomon, Goldman is leaning further into its softer side. The voluntary 1MDB clawback that Mr Cohn has so far resisted is one gesture in that direction.

So too is Mr Solomon’s talk about executive diversity and work-life balance. It wouldn’t suit Goldman to depart from being long-term greedy.

What Mr Cohn is missing is the firm’s recognition that it sometimes pays to be short-term self-aware. REUTERS

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