‘THE FIRST THING YOU NEED TO KNOW ABOUT Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.’[1]
These are the opening lines of a 2010 article written by Matt Taibbi for Rolling Stone magazine. The piece chronicles how many Goldman alumni have seamlessly made the transition to running the world’s central banks and getting their hands on other levers of power. The article struck a chord with many. The vampire metaphor had been deployed with dizzying frequency during the financial crisis. It is not hard to imagine why Goldman Sachs has become a lightning rod for disaffection on both the left and right. Founded in 1869, it is by far the most successful bank in the history of finance. In 2018, it had over 36,000 employees worldwide, and global revenues of $36.6 billion.
September 2008 was the inflection point in the global financial crisis. The collapse of Lehman Brothers in the middle of that month threatened to bring the entire banking edifice down with it. When the US government stepped in and launched the $700 billion troubled asset relief programme (TARP), Goldman Sachs received €10 billion in TARP funding, and the suspicion has always been that Goldman’s alumni on Capitol Hill intervened to ensure its survival. It is one of many accusations that have mired the firm in controversy over the past decade. For example, it emerged that Goldman Sachs had made profits of roughly $4 billion by shorting the US sub-prime market, even though the bank had helped put together the underlying assets, and it was fined $550 million by the Securities and Exchange Commission (SEC) in 2010. It was also revealed, when the sovereign debt crisis erupted in Europe and Greece was forced into an EU–IMF bailout, that Goldman Sachs had helped the country manipulate its national accounts so that it could qualify for membership of the European Monetary Union.
But Goldman Sachs is not the only financial institution to have been found guilty of misconduct. What is now obvious is that in the decade leading up to the 2008 financial crisis, light-touch regulation fostered an ‘anything goes’ culture. The majority of investment banks were guilty of misdemeanours of varying gravity. Goldman Sachs was far from the worst offender.
There is another reason why Goldman Sachs is a lightning rod for widespread disaffection. The British Labour Party, under the leadership of Jeremy Corbyn, has been engulfed by an anti-Semitism scandal over the past few years. Leading members of the party have been accused of condoning abuse directed both at the Jewish community and at Jewish members of the Labour Party itself. Corbyn was embroiled in the scandal in March 2018 when it emerged that in 2012 he had liked a Facebook post of a mural in east London that was replete with several anti-Semitic tropes. He subsequently apologised. When David Baddiel, a British Jewish comedian, went on the BBC’s Daily Politics show a few days later to discuss the incident, his argument was that there is a belief system among the hard left that equates Jews with finance and secret plots to rule the world. Goldman Sachs has become a convenient shorthand for this narrative.
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It was a line of attack that was often used against Peter Sutherland, particularly when he became UN special representative for migration in 2006. However, Sutherland’s relationship with Goldman Sachs goes back to a different era. Having joined the bank in the early 1990s as a regional adviser, he left when he became director general of GATT. Then, after the success of the Uruguay Round and the establishment of the WTO, he returned to Goldman Sachs when Gene Fife, based in London as chairman of Goldman Sachs International, recruited Sutherland as his successor – a choice backed in New York by Steve Friedman, the global head of Goldman Sachs, who had developed a friendship with Sutherland during the latter’s first stint with the bank.
‘The first period of association was very important. He [Sutherland] got to know us and we got to know him,’ says Richard Gnodde, current vice-chairman of Goldman Sachs and chief executive of Goldman Sachs International. ‘Obviously the role of adviser is quite different to the second role. In the advisory role he had no legal governance issues. He wasn’t a full-time employee. But he would have got to know the firm well. He had a very large network and understanding of Brussels. He knew everything about Europe. He had banking experience with AIB. He wasn’t a businessman, but he had networks and he had bundles of energy. GATT and WTO enhanced his reputation and he seemed like the ideal candidate.’
Before Sutherland accepted the most senior role in London, he went to the US to meet Goldman Sachs’ top brass. Among them were some of the most exalted names in the world of finance, including Henry ‘Hank’ Paulson.
‘1994 was a terrible year for Goldman Sachs. We had significant losses. Steve Friedman came in after Labor Day and said he was having heart problems and he needed to leave immediately,’ says Paulson.
Friedman, according to Paulson, was going through a personal crisis at the time. ‘His son had come to him and told him he wanted to be a writer.’
‘Steve has got a son who is a real talent. If you follow the TV programme Game of Thrones, his son is the screenwriter on that show. He goes by the name of David Benioff. Peter [Sutherland], even though he had only been in Goldman Sachs for a short while, took great pride in getting David into Trinity College Dublin.’ Benioff studied Irish literature at Trinity for a year from 1995. While at TCD, he met D. B. Weiss, who would become co-creator of the Game of Thrones TV programme.
‘Decisions had to be made immediately,’ continues Paulson. ‘I had spent my career in Chicago. I had run investment banking from Chicago. I had turned down various promotions because I wanted to stay in Chicago. I also ran Asia and Private Equity. We picked Jon Corzine, but nobody was comfortable with Jon Corzine running Goldman Sachs by himself, so he was chairman and I was vice-chairman and chief operating officer.’ As Paulson explains by way of context, Corzine remained chairman while Paulson was elevated to president. The deal was stitched together very quickly, and it was not to last. Corzine was eventually forced out – he became a Democratic senator for New Jersey and then governor of the state – and Paulson ended up running the firm.
Before he left, Friedman informed Paulson and the rest of the managing partners that he was working to bring Sutherland to the firm. ‘He told us he would be a great addition to Goldman Sachs,’ says Paulson. He was ‘a very special guy’, Friedman had said; the youngest ever attorney general in Ireland, with impressive achievements at the European Commission and the WTO. Friedman was sure Sutherland would do a great job and was keen for Paulson and Corzine to meet him.
Corzine gathered the Goldman Sachs management team for a weekend in the Hamptons at the end of 1994. ‘He said that he would ask Peter to meet us all,’ says Paulson. ‘So Corzine said, as only Corzine could, “I want to meet Peter before you do. I am going to ask him to come on the Thursday and I want you to come on the Friday.” So that was my first introduction.
‘My first impression of Peter was that I liked him. He had very good people skills. I was sceptical about what role he could play at Goldman Sachs. I knew he had been a very good politician with very good experience of government.’ Paulson himself had some small experience of government in his youth, having worked at the Pentagon immediately after leaving business school and going on to work in the White House, and he remained sceptical as to what Sutherland might be able to offer.
Friedman told him that Sutherland’s expectations would have to be managed. He had plenty to offer to Goldman Sachs’ culture and would be a great asset in Europe, but he would not immediately understand the business. He would not be a member of the management committee, a situation Paulson would have to find a way of managing. ‘We were a partnership, he would be a partner, which had some very significant economic benefits. People worked very hard to become partners. I met him and liked him and said he is somebody who is going to be good. I think Goldman Sachs does it better than anybody else. We did it later with Mario Draghi and Mark Carney.’ Draghi was president of the European Central Bank between 2012 and 2019, while at the time of writing Carney is governor of the Bank of England. ‘A good number of former partners have gone back and forth.’
When senior political people go to banks, says Paulson, they very often make a lot of money but they are unhappy because they are relegated to secondary roles. ‘And they find that people would hit them at the knee if they acted like they did in the political world. So I met him [Sutherland] and I liked him and I thought I sure hope it goes well because this is a real talent. But how would the integration work?’
John Thain and John Thornton were the two executives underneath Gene Fife in Goldman Sachs’ London office.[fn1] When Fife left the London office, says Paulson, he had concerns about the future of the operation. ‘[Fife] was the cultural glue. John Thornton and John Thain were really arrogant. They were really bright and really young and they really knew how to offend people. I bonded with Peter because he had an expectation that he would go on the management committee.’ But the management committee was not intended for people in senior positions or with senior titles. It was for the people who were running the businesses day-to-day – the heads of equities, fixed income, investment banking, for example. There was no role for Sutherland in that equation, and somebody would have to go to London and explain this to him. ‘I said I wanted to do it. Jon Corzine said he wanted to do it. I called one of my contacts in London and said how did things go, and he said I wonder did Corzine tell him, because I have never seen Peter look so happy.’ When Paulson asked his contact to find out what Corzine had said, it turned out that he had told Sutherland he would join the management committee the following April.
Paulson approached Corzine and asked why the offer had been made. ‘It keeps him happy,’ was the reply; anything might happen before April. ‘He’ll figure out he isn’t going on it by then,’ said Corzine. ‘I just want to keep him motivated in the meantime.’
Paulson was appalled: ‘It was part of the reason I ended up not working with Jon.’ He was left with no option but to meet Sutherland and explain the situation. When he did so, ‘I became a huge fan of Peter Sutherland. Corzine had offended him beyond belief and made sure he was never going to be a fan of Jon. But Peter is a very unique man. He could be blunt but do it in a very eloquent way. He wasn’t the sort of person who told people what they wanted to hear. He was straight. He had great people skills and great judgement about people.’
Sutherland officially took up the role of chairman of Goldman Sachs International in September 1995.
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Adrian Jones is probably one of the most senior Irish-born executives on Wall Street. The former Irish army cadet is the managing partner of the Principal Investment Area of Goldman Sachs, having joined the firm in 1994. ‘Peter came to New York in 1996 for an internal conference. I saw him and introduced myself. I had read about him and I was very proud that he was joining the firm. He spoke to me for about ten minutes and wanted to know how somebody from Roscommon could end up working for Goldman Sachs in New York. He was very interested in people. A few weeks after that, he called me and said he wanted to hire a new chief of staff in London and would I be interested.’ Sutherland carried out a background check on Jones through Josh Bolton in the New York office, who would become George W. Bush’s White House chief of staff in 2006. Sutherland and Bolton remained good friends.
‘I went over to London in late 1996,’ Jones says. ‘I knew I wanted to do it. It was an opportunity to work with Peter Sutherland for a year. I moved over in April ’97. The formal part of the job was to make Peter as efficient as possible in impacting the firm’s strategy. He had been at the firm for a year. He had a golden Rolodex.’ Having been a big name and a big presence, Sutherland was coming into a firm with a very strong culture and a very narrow hierarchy. Jones’s job was to make the transition as seamless as possible, to ensure he had a chief of staff who understood the firm and made sure they got the best out of him.
Sutherland now had many outside interests. He was already on five international boards, and in April 1997, when Tony Blair won the UK general election, David Simon, chairman of BP, went into government. Sutherland stepped up to take over. ‘He had a lot of plates in the air and I needed to make them steady,’ Jones added.
According to Adrian Jones there were real consequences for what Sutherland could do at Goldman Sachs. ‘For me over the next year it was managing that balancing act. He took a role chairing one of the UK’s biggest PLCs. It probably created challenges in terms of how much he could be integrated into Goldman Sachs. It may have caused tensions higher up.’
Gnodde, though, says there was never any tension at Goldman Sachs about Sutherland’s role at BP. ‘He was a workaholic. He had more than enough energy to do both.’ Goldman Sachs used Sutherland both internally and externally. ‘Externally we used him for government relations and navigating Europe. We were a much smaller organisation at that time. That guidance and access and ability to develop relations was extremely helpful.’
‘He had great intellect and intuition and knowledge about people and structures. He understood politics extremely well. I think it is fair to say he was unlike anybody else at Goldman Sachs, either in London or New York.’ Sutherland’s history, says Jones, was very different from that of the bank’s other employees. ‘People in Goldman Sachs usually joined in their twenties. He was used to dealing with heads of state. He could get on with and disarm different types of people. That is a challenge for people who don’t understand public life. He could navigate that public–private realm very easily.’ If seasoned politicians in their late sixties or seventies in a country that was important to Goldman Sachs were confronted by a group of aggressive bankers thirty years their junior, that could create difficulties. Sutherland would be extremely important in navigating such situations. ‘He was European to the fingertips. The firm at the time was more international than global. He was able to shape issues that were sensitive to Europeans and Asians, able to make sure there were no cultural misunderstandings.’
Sutherland became a mentor for other Irish people at the bank. Gnodde recalls his first encounter with Sutherland, just after he became chairman. ‘I got an invitation to a gathering. I was quite junior. I thought this was really nice of him. I got there a few minutes after everybody else, there were about fifteen people in a huddle with Peter in the middle and then the penny dropped. He had obviously asked human resources for a list of Irish people. I carry an Irish passport, and so my HR file would have me down as an Irishman.’
Basil Geoghegan joined Goldman Sachs a month before Sutherland. He had trained as a solicitor and worked with Slaughter and May in London for the previous two years. The two had first met in 1991, when Geoghegan was doing a master’s in European competition law at the European University in Florence, and they quickly developed a good working relationship. ‘Peter was a very intelligent man. He could master a brief very quickly. I used to write up memos for him when we were going to see clients. When Peter joined Goldman Sachs it was not the behemoth it is now. It was very much the challenger bank. It was not part of the establishment. His address book was clearly important. He was a very quick thinker. He had opinions that counted. People wanted to hear what he had to say about world trade, about European integration. One of the internal sayings in Goldman Sachs was that important people liked important people to be important. He embodied that.’
Hugo MacNeill, who had played full back for Ireland in the Triple Crown-winning team of 1982, was yet another high-profile Irishman at Goldman Sachs. In 2000 he made the decision to leave the firm and move back to Ireland. Sutherland asked him why he didn’t consider opening a Goldman Sachs office in Dublin. ‘I said if we are going to do this, I am going to need your support. And he always did. We ended up working with C&C, Smurfit Kappa, Aer Lingus, Eircom. He understood Europe. He was very passionate about Europe. To have somebody like Peter and his judgement was a tremendous asset. He spoke his mind. He would tell it straight. He was a great ambassador. He was also a great mentor and was a great counsel.’
Adrian Jones explains that Sutherland’s role didn’t entail getting involved in the nuts and bolts of the business. ‘It wasn’t that he didn’t have the intellect to understand what we were doing. He was an extremely intelligent guy and could bring tremendous focus. But there were big swathes of what we did he just didn’t find interesting.’ One of Jones’s roles, he says, was to figure out which meetings it was useful for him to attend – and if he did, what parts of the meeting were relevant to him. ‘He was a terrific salesman and ambassador for the firm, but he could not get interested about shaving a few basis points off borrowing costs and he wasn’t going to sit there and talk about that. Peter didn’t want to be in a room with a client who was just interested in the finer points of finance. He learned to focus on the stuff that matters.’ Sometimes, when Jones asked Sutherland if he wanted him to go over a certain subject in more depth, ‘his eyes would roll and he would say maybe I should dig a little deeper into this, but we have thousands of quantitative analysts who are paid to understand this. Peter wasn’t hired to be an additional smart quant guy. He was hired to help in the areas where we weren’t strong.’
Sutherland’s focus in his work for Goldman Sachs most often related to geopolitical matters. ‘There was tremendous focus on about a dozen countries, mostly in eastern Europe, but the dynamic was also changing in Russia and Turkey – countries where there was huge sensitivity around the western mindset and sensitivity about being patronised, and a wariness about the Anglo-American banker just fetching up in town. This was low-hanging fruit for Peter. Through the WTO he understood these countries. Being Irish was very important because he understood empathy. He was also very important in terms of privatisation mandates in India.’
Gnodde says the two men never discussed Sutherland’s lack of executive experience. ‘He had strong executives underneath him at all times. The complexity of the business was such that he was never going to master all of it. He drove the firm forward on reputational issues, governance issues.’
Paulson says Sutherland was important in terms of developing the culture and identity of Goldman Sachs in London. ‘He had a real mature presence who looked at Europe the way it should be looked at, as a major power centre. He was somebody whose judgement about reputational risk and what Goldman Sachs should or shouldn’t be doing was great. He was a cultural glue. All sorts of people who were on the way up could go and talk to him in a way they couldn’t talk to other people.’ Paulson said that when the time came for him to decide what to do with his career, he realised Jon Corzine wasn’t the right leader for Goldman Sachs – because of their poor working relationship. Also, when he was making decisions about John Thain and John Thornton, neither of whom in his opinion were the right people to run Goldman Sachs, Paulson added that Sutherland had been an enormous help. ‘So that relationship evolved to the point that I used him as a real partner. He never became a real expert on any part of our business, but he learned about every part so as to have good judgements on how to keep the firm out of trouble. He had a terrific nose for risks and reputational risks.
‘I loved the fact that he lived in Britain, but neither he nor I could abide the upper-crust Brits who had all gone to Oxford or Cambridge; the sort who looked down their nose at the rest of us; the sort who smiled while they dissembled. I think Peter’s legacy is that. Goldman Sachs International became a big international bank. It became a big European bank. Gene Fife gets a lot of credit for that and Peter Sutherland gets a lot of credit for that.’
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The flotation of Goldman Sachs in 1999 made a lot of people extremely wealthy. Sutherland himself made $120 million from the initial public offering; according to the Sunday Times Rich List in 2017, he had a personal fortune of €153 million. Sutherland had only been with the bank in an executive capacity for four years before it floated, making him very much the exception among the partners who had cashed in. The vast majority of them had spent their careers at the bank and worked their way up through the ranks. ‘There was probably a lot of people looking at Peter saying where did this guy come from,’ observes MacNeill. ‘But when people got to know him that put an end to any question marks.’
Hywel Jones, who had worked with Sutherland on the Erasmus programme, developed a friendship with him after the European Commission. Every year they would meet for the Ireland v. Wales match in the Six Nations rugby tournament. When it was played in Cardiff Sutherland stayed with Jones; when it was played in Dublin, Jones with Sutherland. Jones recalls the first such match after the flotation. ‘I never understood why he went to BP and Goldman Sachs.’ Finding himself in a car with Sutherland on the way to Cardiff, Jones was shocked by how much money he had. ‘I told him he had to do some good with it. That was just after he got a cheque.’ Jones told him to set up a foundation. ‘He was generous. He gave me some money for the European Research Centre. I thought he should have given us more. He saw his children right. He gave money to the Sutherland Centre in UCD.’ Sutherland did give away a sizeable chunk of his windfall, but it was done privately.
Perhaps unaware of this, Jones feels he could have done more. ‘I don’t understand why he stuck with it. He had a good period with BP and Goldman Sachs. He could have pulled away and his voice would have been stronger. People knew what he was earning. He reacted calmly. He didn’t mind me saying it. We were good friends. But he wasn’t listening.’
Sutherland won the lifetime achievement award at the Business & Finance Awards in 2007. He was among the cream of Irish business that evening, but his speech was quite a departure for such an occasion; he felt ‘a bit of a fraud’, he said, for being the recipient of such a prestigious award as he was not a businessman in the orthodox sense. According to friends he was acutely aware that he had moved to the private sector relatively late in his career and lacked the executive experience of some of his peers.
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When Hank Paulson left Goldman Sachs in 2008 to become US Treasury Secretary, he would have to preside over the bailout of the US financial system. ‘I called him a couple of times when I left. When I left I went to the Treasury, so I was cut off from Goldman Sachs.’ Sutherland provided significant assistance for the Irish government when it was caught up in the sovereign debt crisis. ‘I was not one of the people he contacted. Ireland got into trouble in the backend of the crisis. I was dealing with the big European countries. I knew that he was doing that on behalf of Ireland.’
Aware of the backlash Sutherland faced when the economy turned in 2008, Adrian Jones says it wasn’t all about Goldman Sachs. ‘There was BP as well and RBS. He became a piñata.’
Gnodde emphasises Sutherland’s loyalty to Goldman Sachs. ‘He did his public service, in Ireland, Europe and at the WTO. He had built up a great reputation. But all of his wealth came from Goldman Sachs, it didn’t come from anywhere else. It gave him a remarkable platform.’ Alongside the BP chairmanship, the two roles were critical pillars of his business career. ‘He was a partner when the firm went public and he did very well. He did very well for the firm, so he deserved to do well. Peter wasn’t someone who ran away from a scrap if there was a bit of difficulty or controversy. He believed in the firm and he believed in the values of the firm, and he saw some of the negative commentary for what it was, which was a cheap shot at the leading institution in what over time became an unpopular industry. That sort of thing did not bother Peter. I’m not saying he liked it.’
Gnodde says that he and the other Goldman Sachs executives were very aware of the assistance Sutherland gave the Irish government when the economy hit the buffers. ‘The thing about Peter was he would be very supportive and always had your back, but he would also be very direct with you. I say that because it was the same for Ireland. Publicly he was very supportive, but he was also very straight with the finance minister about what had to be done. He would have relied a lot on our bank experts about what needed to be done in terms of recapitalising the banks. He was very engaged and we spoke about that frequently. Peter was a man of enormous breadth and covered a lot of ground.’
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Sutherland’s Goldman Sachs role was sometimes called upon in the most unlikely of places. Just before Easter 2007, he joined his good friend Nicholas Kearns and a few other men on a pilgrimage to Mount Athos in Greece, through a mountainous region in the north-east of the country that is famous for its monasteries. The pilgrimage took them on foot between one monastery and another, where they stayed overnight in sparse conditions.
After a few days, Sutherland was struggling with the walking and the limited food. When Kearns shared a room with Sutherland on one night, he noted in his diary that Maruja deserved to be canonised. Sutherland’s snore reached volcanic proportions as the night unfolded.
Finally the group arrived at their third and final monastery. Soon after they checked in, a monk invited the men to meet the abbot. ‘The abbot used the monk as his interpreter, asking if this was our first visit, how we had heard of Athos – polite formal questions.’
Kearns spoke on behalf of the group. ‘When I finished my little account, the abbot delivered himself of a homily to our group, all of which was translated for him by the monk, and we nodded sagely and gravely at the right moments, which were largely focused on prayer, doing God’s will and good deeds. He gave us a form of blessing at the end of what seemed for him a familiar routine and then murmured something to the monk.
‘The latter eventually spoke: “The abbot is wondering if Meester Sutherland, who has much experience, would advise the Vatopedi Monastery about its assets and investments on mainland Greece.” We kept straight faces with some difficulty as Peter blustered out some reply.’