Goldman Executive Slams Company’s “Toxic And Destructive” Culture In Resignation Letter

An executive director at Goldman Sachs’ London office has criticised his employers’ “toxic and destructive” culture as the primary reason for his resignation from the company, in a damning letter published in the New York Times on Wednesday.

An executive director at Goldman Sachs’ London office has criticised his employers’ “toxic and destructive” culture as the primary reason for his resignation from the company, in a damning letter published in the New York Times on Wednesday.

Greg Smith, the head of the firm’s US equity derivatives business in Europe, the Middle East and Africa, accused the bank of losing its “moral fibre”, as well for putting profits ahead of customers’ interests, and forsaking its original culture that made the company so successful in the first place.

“It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years,” said Smith.

“It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.”

A Goldman veteran for over 12 years, Smith also criticised current CEO Lloyd C. Blankfein and president Gary D. Cohn for presiding over the company’s gradual decline into “moral bankruptcy” – to the point that executives at Goldman were now referring to their own clients as “muppets”, while “ripping off” clients was the easiest way to get ahead in the company.

“It makes me ill how callously people talk about ripping their clients off,” said Smith.

[quote]“How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an axe murderer) you will be promoted into a position of influence.”[/quote]

In response to Smith’s letter, both Blankfein and Cohn sent a joint internal memo to their employees, defending the company’s work environment as well as their commitment to their clients.

“In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people. Everyone is entitled to his or her opinion,” said the memo, according to Bloomberg, which managed to obtain a copy.

“But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback you have provided the firm and independent, public surveys of workplace environments.”

[quote]We are far from perfect, but where the firm has seen a problem, we’ve responded to it seriously and substantively. And we have demonstrated that fact.”[/quote]

According to a former intern at Goldman, who was mentored by Smith between 2006 and 2008, Smith was a “nice and friendly guy”, who often took care of junior employees and “gave them great pieces of advice”.

“He’s (Smith’s) the last guy to want to make himself the centre of attention. He’s more the quiet, reserved type – not your typical flashy investment banker. He’s a very ethical, idealistic guy,” said Avneesh Saluja, who is now a PhD student at Carnegie Mellon, during an interview with the Financial Times.

A school friend of Smith also hypothesised that Smith’s unease at the company could have “been building up over many years”, though Smith had never explicitly voiced unhappiness at the company before.

Read Greg Smith’s full op-ed piece and resignation letter on the New York Times.

Read Lloyd C. Blankfein & Gary D. Cohn full response on Bloomberg.

Read EconomyWatch.com Feature On How Goldman Sachs Became The Most Hated Bank In The World and The Role of Goldman Sachs In The Current European Crisis.