“On a day the chief executives of eight large banks were questioned about their industry’s excesses on Capitol Hill, Andrew M. Cuomo, the attorney general of New York State, raised hackles by disclosing how Merrill Lynch distributed its 2008 bonus pool. The payments, made just before Merrill Lynch was sold to Bank of America in December, have already stirred anger for being paid earlier than usual. And Mr. Cuomo made it clear that the bulk of the bonuses were paid to a small portion of Merrill Lynch’s 39,000 employees. “Merrill chose to make millionaires out of a select group of 700 employees,” Mr. Cuomo wrote in the letter, which was sent to the House Financial Services Committee on Tuesday night.” From The New York Times web site, February 11, 2009
If you search Wikipedia for ‘Hank Paulson,’ you find very interesting information about Henry Merritt “Hank” Paulson, Jr. His birthday, his children’s names, his religion and that he is the 74th United States Treasury Secretary. Stated clearly, he accumulated enormous personal wealth during a career at Goldman Sachs, eventually becoming the CEO. He went to Dartmouth where he was in a fraternity and All-American athlete, Harvard for his MBA.
His fraternity brothers from Dartmouth and classmates from Harvard are, coincidentally, the same men that run Goldman, the financial services firm that magically received government injections of capital to support it during the first waves of the financial crisis. In today’s globalized world, the financial systems that have created unprecedented levels of theoretical money and worth, investment services that have inflated costs and prices and replaced manufacturing economies in many Western countries, are intertwined and incredibly complex. I admit to knowing very little about the algorithms, computer models, contracts, and legal agreements that enable this world, but it is worth considering the global element of, as some call him, King Hank: what if the Goldman scenario happened in another country? Zimbabwe for example.
Robert Mugabe is, the international community agrees, a corrupt, controlling tyrant with an exhibited disdain for innocent civilians. He ruined the country, and the basic financial structures intended to stock shops, pay civil servants, capitalize banks, grant credit – facilitate the most fundamental functions of government. People in Zimbabwe go shopping in the morning because the worth of their money depreciates throughout the day.
Before Mugabe, Collins Onyeangu was president. Onyeangu is Mugabe’s father. Born into a political dynasty, Collins amassed an enormous personal fortune in the private sector before serving as director of the nation’s intelligence agency, eventually vice president, and president.
Mugabe was put forth by one of two rivaling political parties in Zimbabwe after eight years of opposition rule. The results of the election were widely contested, and international voting monitors documented fraud, irregularities in counting, corruption, and intimidation aimed at ethnic minorities. Media and official reports stated that Alfred Ganwengzi won the general election, carried largely by urban areas, but did not have a parliamentary mandate to claim the presidency. The decision, of national and world importance, was left to the courts, a highly politicized, insider’s realm.
At the time of the election, another one of Onyeangu’s sons, Mugabe’s brother Juma Wangyariri, was the Minister of Parliament of the area in dispute, Lingala Province. Lingala province is rife with corruption and criminals, and during election periods ethnic violence is common. With enough votes from Lingala Province, an area populated largely by Mugabe supporters, Mugabe could secure a court-ordered claim to the presidency.
Robert Mugabe was inaugurated president, despite Alfred Ganwengzi’s claims of corruption, brotherly favoritism, cheating, and that he won the national vote.
Mugabe’s presidency was one of the worst in the history of Zimbabwe, warring wantonly, allowing the ruination of the country’s previously sound financial system, imprisoning, spying on, and harassing citizens. With two years left in his presidency, Mugabe appointed Henry Okech, the CEO of Simbaza Securities, as Treasury Minister. Simbaza Securities is known for their egregiously high bonuses and corporate compensation, executives who wear crocodile shoes, lavish private jets, and nights on the town at the capital city’s most expensive brothels.
One of Okech’s main tasks was to save the country’s economy from a recession unprecedented in size and scope. Gigantic firms and institutional players plummeted, the stock market sank, and the economy of Zimbabwe fumbled. Okech spoke strongly in the media, but intervened randomly and haphazardly. He declared that certain firms would not get help and had to be bought out, taken over, or declare bankruptcy.
When board members from Simbaza Securities asked for help, Okech responded. Many of the board members are childhood friends from the elite Shepherd’s Academy for Boys – the most prestigious school in Zimbabwe and the source of countless politicians and business leaders. The former CEO of Simbaza Securities, Okech had a close relationship with all the executives at Simbaza, and many friendships dating back to private clubs during their school days. As other firms disintegrated, he lobbied the government to rescue Simbaza, a firm, he argued, that was so important to the financial system that its collapse would be catastrophic. Simbaza was granted the help they asked for.
After a national election, Mugabe was ousted from power, Okech is no longer the Treasury Minister, and Zimbabwe's economy is crumbling. Both men are rich. Simbaza Securities is the focus of a government query into excessive spending during economic crisis, money they received, without conditions, as a result of Okech’s actions.
These names, schools, and companies are fictitious. None of the above, except all of the info on Hank Paulson, is true.
Zimbabwe is an example, but this happens around the world all the time. We suffer from selective hearing.
If the details of the story sound familiar it is because America is watching its financial systems disintegrate as the result of deregulation, cronyism, corruption and old boys deals. Substitute America for Zimbabwe; this is our story, but we think it isn't. The thought of comparing anything between these two countries seems outlandish, but only because we are less willing to acknowledge the scurrilous when looking at America. We are armed with democratic excuses and airs of American exceptionalism.
Hank Paulson is the former CEO of Morgan Stanley, was one of the lead lobbyists in relaxing SEC oversight, control, and regulatory powers of investment banks during his time there, was cashed out before joining the government, watched Lehman, WaMu and others sink but intervened when his boys at Morgan needed help. This stinks odiously of unfair play. If this set of information was a Reuters wire story about a country in west Africa, the West’s assumption and conclusion would be corruption, greedy Africans at it again.
In the US, there seem to be fewer coincidences, reports of disdainful generals, buying voters and unethical influence in business and politics. Or, it is reported, is the lead news story for four days until a hot, young, entertainment couple gets into a fight. Or, we ignore it in a delusional bliss as something less harmful than it is. Criminal acts, acts that have inflicted seemingly irreversible damage to our country’s reputation in the world and the global financial system are not met with outrage, riots in the streets, calls for prosecution, resignation or impeachment. Our actors are as bad, or worse, but look different and we do not hold ourselves accountable in holding them accountable. Uncivilized, downright undemocratic behavior is left for the “developing” world. Actions that happen in Africa, Haiti, countries in Latin America and Asia are attacked as mockeries of electoral politics, specious contracts and phantom companies but in US nothing happens.
The West's behavior can be as reprehensible as the villains we think are so different, even though they are not. Look outside to look within, and we see absurdity consistently across the world. The least we can do is refuse selective hearing, be honest in evaluating ourselves and assessing harm, wherever it happens.