Meg Whitman's eight-year-old bit of hanky-panky with Goldman Sachs has been getting lots of attention these past few days, no doubt the result of the SEC civil case against the Wall Street giant. What Whitman did reminds me a little of what Bruce Karatz did in backdating options, although Whitman's actions were never considered illegal. In Hollywood, it would be like a mega-millionaire movie star accepting award show swag: Tacky but permissible. Basically, the Republican candidate for governor received shares in sought-after initial public stock offerings, and resold them within hours, often for a handsome profit. Goldman was essentially giving Whitman the shares as a gift - in return, she would nudge eBay business Goldman Sach's way. By her billionaire standards, the money was inconsequential - under $2 million - and it happened at a time when this kind of quid pro quo dealmaking was constantly going on. Some eBay shareholders, however, were none too pleased and sued Whitman and other former eBay executives. The case was settled in 2005 for $3 million - again chump change. Except that it involved Goldman Sachs. Already, Whitman opponents smell blood. From press release:
SACRAMENTO-- California Labor Federation Executive Secretary-Treasurer Art Pulaski announced today the launch of a massive grassroots campaign that will expose Meg Whitman's Wall Street agenda and her support of corporate economic policies that have harmed California's families. Because combating Meg's avalanche of TV ads and estimated $150 million campaign war chest can only be done with a broad-based campaign that reaches voters not only on the airwaves but also one-on-one where they live and work, Pulaski said the "Wall Street Whitman" campaign will mobilize union members statewide to engage their neighbors and co-workers, and will make use of innovative and precise voter contact technology.
The Whitman people are countering that Jerry Brown's sister, Kathleen Brown, had been a Goldman executive right around the time that Jerry, as the mayor of Oakland, worked with Goldman on a popular financing deal known as an interest rate swap (L.A. and many other cities were doing the same thing). Whitman probably hopes that the two connections will cancel each other out by November - and they probably will. Even so, this sort of awkwardness awaits anyone who has a Goldman Sachs tie. And let it be said that the entire world has a Goldman tie. The tarring is indiscriminate and unfair, and it veers away from the specific issues related to the SEC suit. But no one seems especially interested in the particulars behind what happened.