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¶ … company through ethical problem years. Read article summarize key points: company involved; problem hand; steps company; outcry public/government; final outcome. Then analyze issue involved: How event avoided; what company; what charge; long -term effects issue.
Goldman Sachs' Greek tragedy
Companies' misbehavior usually has a deleterious effect upon their customers, employees, and shareholders. However, in the case of the investment banking firm Goldman Sachs, the unethical behavior of Goldman caused the downfall of an entire country and has impeded the economic growth of the European Union. "One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels," enabling the nation of Greece to conceal its debt from the EU when it first made a bid for membership, and to continue to "skirt European debt limits" mandatory for continued membership in the EU (Story, Thomas & Schwartz 2010: 1).
In 2001, Greece was admitted to the European Union, an economic agreement in which all member countries agree to observe certain economic standards, in exchange for benefits such as the free trade of goods and labor between their borders and the use of the Euro as a currency. "Goldman helped the [Greek] government quietly borrow billions" by making the deal look like a currency trade "rather than a loan, [which] helped Athens to meet Europe's deficit rules while continuing to spend beyond its means" (Story, Thomas & Schwartz 2010: 1). Such financial chicanery would have been extraordinary even on an individual organizational level, but Goldman enabled the fraud to be perpetrated by an entire country.
Goldman specifically created new financial instruments for Greece...
"In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come" (Story, Thomas & Schwartz 2010: 1). This lack of transparency was patently unfair to bond holders, given that they purchased Greek bonds without any idea of how much money Greece owed, and was also unfair to members of the EU, who extended the benefits of membership based upon Greece meeting certain conditions of solvency. Rather than trying to trim its bloated public sector jobs, more rationally manage its pension system (famous for early retirement for workers in many protected professions), or to attempting to institute a more effective tax collective system, Greece concealed the payment of its debt with the aid of Goldman. Today, Greece owes $300 billion to its creditors and accumulated these debts with the aid of a major U.S. investment baking firm using tactics that were technically legal but were completely lacking in any spirit of ethical transparency. "Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it" said one economist (Story, Thomas & Schwartz 2010: 1).
Although the actions of Goldman may have been unethical, they were perfectly legal. Markets for sovereign (national debt) are virtually unregulated. "Wall Street did not create Europe's debt problem. But bankers enabled Greece and others to borrow beyond their means" (Story, Thomas & Schwartz…
References
Story, Louise, Landon Thomas & Nelson Schwartz. (2010). Wall Street helped to mask debt fueling Europe's crisis. The New York Times. Retrieved: http://www.nytimes.com/2010/02/14/business/global/14debt.html?_r=1&pagewanted=1&th&emc=th
Surowiecki, James. (2011). Dodger mania. The New Yorker. Retrieved:
http://www.newyorker.com/talk/financial/2011/07/11/110711ta_talk_surowiecki#ixzz1u2VqAbuf
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