Goldman chief quizzed over controversial land donation

The bank gave 680,000 acres of ecologically sensitive land on the Chilean island of Tierra del Fuego to the Wildlife Conservation Society (WCS), to which Merritt Paulson is an adviser.

Investors accused Hank Paulson of a conflict of interest, and several told him to rip up a corporate environmental policy to concentrate on what the financial giant is best at ­ making money.

The criticisms came during an otherwise triumphalist meeting for Goldman, which made profits of $100m (£58m) a week last year and looks set to break all records in 2006. More than 100 shareholders packed an auditorium at the company's offices in Manhattan's financial district.

In sharp contrast to many shareholder meetings in the UK, where environmental campaigners often make their presence felt, the Goldman meeting was assailed by critics who believe the company is being too green. Representatives of two activist shareholders, the Free Enterprise Action Fund (FEAF) and the National Legal and Policy Centre (NLPC), lashed out at Mr Paulson, a long-time supporter of environmental campaign groups.

Peter Flaherty, of the NLPC, said Goldman's new green policy, which promises the company will reduce its impact on the environment and will support laws to cut greenhouse gas emissions, commits the company, in effect, to " lobbying against its own interests".

Mr Paulson is also chairman of Nature Conservancy which was involved in the Chilean deal, netting a $144,000 consultancy fee.

But he strongly defended the deal. The land, including important beach forest, had come into Goldman's hands when it acquired a portfolio of mortgages in default, and he had not taken part in board discussions on the donation, he said. The WCS must find $500m a year to maintain the land.

"I can't think of another action that has been so overwhelmingly approved by our constituents," Mr Paulson said, adding there were commercial advantages to wearing a company's green credentials on its sleeve. "There has been a huge outswell of support from college campuses. I was at the Harvard Business School recently, and I know that this is an advantage when it comes to hiring the best and brightest."

The average salary of a Goldman employee ­ averaging everyone from Mr Paulson down to the clerical staff ­ topped $500,000 for the first time in 2005, as the company shared the spoils from its massive trading operations, which take bets on the financial markets. The company is also still No 1 in the league table of advisers in the booming merger and acquisition activity.

Mr Paulson said: "One thing we know at Goldman Sachs, we know a little bit about how to make money. I wouldn't last long as chief executive if my priority was not delivering top financial performance."