How the Goldman Sachs diaspora spread its influence across the globe

Two bosses in London are rumoured to be in line for £10m bonuses this Christmas
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The Independent Online

Any reunion of Goldman Sachs alumni is always likely to be a pretty intimidating affair. Bankers past and present from Wall Street's most prestigious fortune factory have been recruited to a rash of the very top jobs in the corporate, economic and media worlds.

Goldman old boys can count among their number a former BBC chairman, directors of leading British and US companies, members of the Bank of England's Monetary Policy Committee, a former US Treasury Secretary, a chief executive of the New York Stock Exchange and, since the appointment of Paul Deighton yesterday, the man charged with organising the 2012 Olympic Games in London.

Even by the uncommon yardsticks of investment banking - monumental bonuses, super-competitive machismo and ever more pervasive influence across the planet - Goldman is remarkable. For the fifth year on the spin, the bank advised on more mergers and acquisitions than any other. Profits for the last three months of its year surged 37 per cent to a record $1.63bn (£924m). Deals in the pipeline mean 2006 looks set to be another bumper year.

Its rainmakers - those that make the deals happen - and the leaders of other lucrative divisions can expect multimillion-dollar bonuses for Christmas. In London, the head of private equity Richard Sharp, and Mike Sherwood, who runs trading, are rumoured to be in line for £10m bonuses. About 25 others could scoop £3m apiece.

Despite its extraordinary success, the bank has shied away from publicity since its beginnings when the German immigrant Marcus Goldman discounted IOUs among the diamond merchants of New York in the 1870s.

Ostentation is still frowned upon. The chairman Hank Paulson wears a cheap Japanese watch and a predecessor, Steve Friedman, carried his papers in a battered LL Bean bag.

Goldman remained a private partnership long after rivals floated or hawked themselves to the highest bidder. Managers stay there longer (a partner is typically in post for 10 years), while "star" culture is shunned for a collegiate spirit. Top jobs are often divided to foster consensus decision-making.

A Goldman insider said: "People always say 'we' not 'I' even in an e-mail. It's always the team that takes the credit, not the individual." When Goldman finally sold shares in New York in 1999, its 221 partners were allocated stock worth more than $50m each. Gavyn Davies, the then chief economist in London and later BBC chairman, held a £87.5m stake.

Doom mongers prophesying flotation would water down the Goldman corporate culture and loyalty proved wide of the mark. Most staff stayed on and 45 per cent of Goldman shares are still owned by employees. They, it is often said, are owned by the bank, where 17-hour days are common and family is subordinated to the rigorous demands of the bank. Working there is less a job, more a religion.

When Joyti De-Laurey, a Goldman secretary, was found to have siphoned off £4.5m from the bank accounts of three bosses last year, they said they had been too busy to notice.

The Goldman recruitment process is famously tough, with a junior investment banker likely to face 40 interviews before being allowed to sign up. Once in the bank culls the weakest each year. "You can't afford to sit back here," a Goldman insider said. "You'll get found out pretty quickly."

In the US, the bank has remained faithful to its Jewish roots. It is staunchly Democratic, with Robert Rubin, a former Goldman co-chairman, appointed treasury secretary to the Clinton administration.

Since flotation, the greatest shift at Goldman has been in its business mix. The bank was built on long-term relationships with blue-chip clients in the UK and US, and numerous governments. That remains, but Goldman is increasingly focused on principle trading - taking positions in shares, commodities and bonds - with its own money.

Goldman remains the investment bank that rivals measure themselves against, with offices in 23 countries and 40 cities, and 23,000 staff. Of those, some as yet obscure are sure to fill still more high-profile posts across industry and other fields in years to come.