Feb. 16, 2013 | Press Releases

HRF Calls on Goldman Sachs to Cancel Russia Consulting Deal

NEW YORK (February 6, 2013)—The Human Rights Foundation (HRF) today called on Goldman Sachs Group, Inc. to cease accepting payments from the Russian Federation for attempting to polish the country’s tarnished image among potential investors and international rating agencies. Russian officials last month announced that they will pay the Wall Street firm $500,000 over the next three years to help the Putin regime lure foreign cash.

Goldman Sachs has a reputation for knowing global finance, but it has behaved abhorrently when it comes to human rights and assessing investment risk in Russia,” said HRF president Thor Halvorssen. “By striking this deal with Vladimir Putin, Goldman Sachs is abetting one of the world’s most corrupt governments that’s been repeatedly cited by independent monitoring groups for ignoring human rights, property rights, and sound corporate governance practices. The Putin government shoots at students, tortures whistleblowers to death, and detains and expropriates its enemies—and Goldman is helping them attract investors. It’s mind-boggling.”

Russia ranks 133 out of 176 countries on Transparency International’s Corruption Perceptions Index, alongside Iran and Kazakhstan and below Uganda and Nicaragua. International courts, human rights groups across the political spectrum, and investment analysts have decried the political and economic toll on Russia of such ruinous acts as Putin’s imprisonment of former YUKOS chairman Mikhail Khodorkovsky for more than nine years on trumped up charges.

“Why would Goldman Sachs put its credibility on the line and attempt to encourage investors to put their money at risk in Russia when everyone from the smallest entrepreneur to the greatest private equity titan faces the very real chance that they will lose everything given the Putin regime’s abysmal record of midnight raids, commercially inspired arrests, targeted tax probes and outright asset thefts?” Halvorssen said. “Even aggressive and savvy operators like BP, Hewlett-Packard, Ikea, Microsoft and Starbucks have run afoul of Putin and his corrupt regime. How can Goldman be so short-sighted?”

Since Putin reassumed the presidency in May 2012, Russia has prosecuted and jailed members of the punk band Pussy Riot for protesting the regime, ended more than two decades of civil society and public health programs sponsored by the U.S. Agency for International Development and cracked down on pro-democracy and non-profit advocacy groups.

Then, in December, Putin sparked mass protest in Moscow by prohibiting the adoption of Russian children by American citizens, which Russian leaders said was in retaliation for a new law signed by President Obama that punishes Russian human rights violators. The American measure—“The Magnitsky Law”—is named after Russian lawyer Sergei Magnitsky, who was jailed, tortured and killed after investigating fraud involving the Putin regime carried out against a foreign investor. The new law hits the regime in the pocket book, barring Russian human rights violators from entering the U.S. and freezing any assets they have in U.S. banks. Last year Goldman Sachs hired a company to lobby against the proposed legislation in Congress. When the disclosure forms were made public Goldman claimed it had been simply “monitoring” the progress of the Magnitsky Bill.

“Goldman Sachs’ deal with Putin ranks among the worst examples ever of a company seeking to bolster its profits by laundering the financial reputation of a country led by a corruptly elected despot,” said HRF chairman Garry Kasparov. “It’s appalling that Goldman Sachs sees nothing wrong with defending a regime that has made a farce of the legal system, ignored property rights and murdered and imprisoned brave men and women who have sought to promote economic freedom. Save the obvious moral issues, Goldman Sachs is ignoring its fiduciary responsibility to its shareholders and risking prosecution of its executives and board members under the U.S. Foreign Corruption Practices Act by asking investors to risk their capital in Russia before much-needed reforms are put in place.”

Goldman Sachs says that in its new role it will seek to highlight Russia’s commitment to increasing government transparency. “But the truth is transparency and corruption won’t take hold as long as the regime flouts the rule of law and uses Russia’s financial system as its personal piggy bank,” Kasparov said. “Virtually every NGO warns that the human rights situation in Russia is at its worst since the fall of the Soviet Union over two decades ago. By doing business with Putin, Goldman Sachs is acting as an enemy of free enterprise and economic freedom.”

HRF protects and promotes human rights. HRF believes that all human beings are entitled to freedom of self-determination, freedom from tyranny, the rights to speak freely, the right to own and dispose of property, to associate with those of like mind, and to leave and enter their countries. Individuals in a free society must be accorded equal treatment and due process under law, and must have the opportunity to participate in the governments of their countries; HRF’s ideals likewise find expression in the conviction that all human beings have the right to be free from arbitrary detainment or exile and from interference and coercion in matters of conscience. HRF does not support nor condone violence. HRF’s International Council is chaired by pro-democracy activist Garry Kasparov, and includes former prisoners of conscience George Ayittey, Vladimir Bukovsky, Palden Gyatso, Mutabar Tadjibaeva, Ramón J. Velásquez, Elie Wiesel, and Harry Wu.

Contact: Jamie Hancock, jamie@thehrf.org, 212-246-8486