Sunday 25 February 2018

Former Goldman executive lifts veil on a toxic workplace

Nikhil Kumar

BACK on June 12, 2000, as the dot-com bubble was deflating, young Greg Smith was all puffed up, clutching his "extra-large coffee" and looking up "at the formidable tower that housed Goldman Sach's equities trading headquarters" in New York. "Holy shit," he thought, as he arrived for the first day of his summer internship at the Wall Street bank.

More than a decade later, on March 14, 2012, not long after a different financial bubble had burst, the remark may well have risen in a hush over the Goldman dealing room as wide-eyed traders poured over an opinion piece in 'The New York Times'. Title? "Why I'm Leaving Goldman Sachs". Author? Greg Smith. "Today is my last day at Goldman Sachs," Mr Smith proclaimed. Over 12 years, he said, he had understood what made the bank tick. "And I can honestly say that the environment is now as toxic and destructive as I have ever seen it." Now, Mr Smith, who had risen to become a Goldman executive director and head of the firm's US equity derivatives business in Europe, the Middle East and Africa before quitting, is preparing tell us the full story. According to reports, his biting commentary on Goldman won him a book deal and a $1.5m advance, with the product of his labours, imaginatively titled 'Why I Left Goldman Sachs', set to hit the shelves next week. The night before, he is reported to be planning to break his self-imposed hiatus from the public square with a US television interview. Ahead of the launch, Goldman said it had conducted a detailed review of Mr Smith's claims and found no evidence to support them.

But as we near the release date it seems the firm's president, Gary Cohn, who along with chief executive Lloyd Blankfein merited special mention in Mr Smith's op-ed for losing "hold of the firm's culture on their watch", is likely to be among those waiting in line for a copy of the tome. "I probably will read it," he said earlier this month.

If Mr Cohn wants an early look, the first chapter was released on the Apple iBookstore this week. Titled 'I Don't Know, But I'll Find Out', it offers a glimpse of Mr Smith's first days in the belly of the "great vampire squid", as the bank was memorably dubbed by 'Rolling Stone'.

Back then Mr Smith was a dedicated convert to the Goldman cause. That summer's day, the 21-year-old had no premonition of what -- in his view -- Goldman would become, and how he would go on to feel. Young Mr Smith, then on a scholarship at Stanford, was, to his mind, justifiably proud. "The selection process for any type of job at Goldman Sachs is extremely rigorous. On average, only one in 45 people . . . who apply for a summer internship, or a full-time job, get an offer," he says. To get ahead, he'd prepped hard for the interview. "I'd read 'The Culture of Success', a history of the firm by Lisa Endlich, a former Goldman VP," he reveals. Who doesn't, right?

With a toe in the door, Mr Smith was issued with a folding stool and a "big orange ID badge" on a "bright orange lanyard" -- status markers to remind an intern that he or she was mere "plebe, a newbie, a punk-kid". "It was innately demeaning," he says, recounting how interns had to carry around the stools "at all times because there were no extra chairs at the trading desks". The internship itself was demanding. "You came to work at 5:45 or 6 or 6:30 in the morning," Mr Smith recalls. He also recalls the treatment handed out to an intern after a managing director ordered a cheddar cheese sandwich and was presented with a cheese salad. The boss "opened the container, looked at the salad, looked up at the kid, closed the container and threw it in the trash. It was a bit harsh, but it was also a teaching moment," Mr Smith writes.

The anecdotes chime with the caricature of Wall Street as a laddish jungle where ritual hazing is just part of doing business. So far we have only seen Chapter 1 but, tantalisingly, Chapter 5 is titled 'Welcome to the Casino'.

Indo Business

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