Goldman Sachs: Really betraying a revolution

'Really betraying a revolution' was something I was reminded of today with news of Goldman Sachs profiteering from our Royal Mail privatisation. 

It was the title of an article written in 2005 by my colleague "on the ground" in Ukraine during their Orange revolution. His redaction of a Washington Post article 'Betrayal of a revolution' which had criticised Ukraine's new government under Yulia Tymoshenko and came from by Anders Aslund, director of the Russian and Eurasian Program at the Carnegie Endowment for International Peace.

"The primary thrust of the article was to condemn review of corrupt privatization deals under Ukraine’s former, pre-revolutionary regime.  According to Mr. Aslund, who enjoys a respectable bully pulpit due to his job title, most of the ills in new Ukraine’s economy are directed related to Prime Minister Tymoshenko’s management.  He states, as an article of faith but without any corroborating evidence to demonstrate cause and effect versus mere correlation, that “economic growth is screeching to a halt as a result.”  Peppering his criticism are words like “populist”, “socialist”, and “state capitalism” – suggesting, again as articles of faith and nothing more, that these are necessarily bad things that can only contribute to economic problems.  Increasing pensions and salaries, to move workers and retirees a little further out of poverty-level income, were condemned as budget busters that Ukraine’s new government cannot afford – despite the fact that not doing so essentially guarantees perpetuation of graft and corruption.  Elimination of graft and corruption, and raising the overall standard of living for ALL Ukrainians rather than a few insanely greedy oligarch clans, was the main underlying and implied reason for the Orange Revolution – at least from hundreds of people, activists and otherwise, I talked with on the ground during and after the Revolution. "

Drawing attention to the efforts of the Kremlin assisted  by BP to undermine the new democracy, he goes on to make an interesting point about US intentions.

"What economic hit men will surely try to do is persuade Ukraine to give up lucrative state assets to private buyers – and thus lose most of that revenue base – in exchange for the “privilege” of borrowing billions of dollars and going into debt to Western governments, particularly the US.  That’s the deal, and that is what and all is going on with most of this noise against Ukrainian Prime Minister Yulia Tymoshenko at this point in time.  God forbid that she have the courage to do the right things for Ukraine."

As we all know she's now imprisoned by her political rivals and that stands to scupper an EU Association Agreement. 

In 2007 something strange was going on at Goldman Sachs, as a conversation with John Bird would reveal. With hindsight it was just before their role in the financial crisis would be revealed.  Jeremy Harrison puts this to him: 

"You’ve mentioned internationalism and how important that is to you. We’ve got a number of questions about that that I want to just to put in to finish off with. Asif Saleh, who’s actually a director of Goldman Sachs – has been asking… is there support of help to start UK social enterprises that actually target countries or impoverished minority communities overseas? And actually, he’s not the only one whose been asking that question. Jeff Mowatt was asking that question about the role of UK social enterprises in overseas development, whether there’s money for it, whether there should be money for it?"

 

In October 2004 we had literally walked into a revolution, which was ironic given what we'd said about poverty a few months earlier with our UK business plan:

"The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode."

It made this disruptive recommendation:

"Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

We'd soon become directly involved in challenging the endemic corruption in exposing what were described as 'Death Camps for Children' which would return to the matter of corrupt privatisations, saying:

"Excuses won't work, particularly in light of a handful of oligarchs in Ukraine having been allowed to loot Ukraine's economy for tens of billions of dollars. I point specifically to Akhmetov, Pinchuk, Poroshenko, and Kuchma, and this is certainly not an exhaustive list. These people can single-handedly finance 100% of all that will ever be needed to save Ukraine's orphans. None of them evidently bother to think past their bank accounts, and seem to have at least tacit blessings at this point from the new regime to keep their loot while no one wants to consider Ukraine's death camps, and the widespread poverty that produced them..

It is to the credit of the new regime that, at least, one of the most glaring and egregious thefts of state property has been reversed vis-a-vis the reprivatization of Kryvorishtal Steel company. I argued on Maidan a year ago that this reprivatization was appropriate if the state could get at least $3 billion for the sale as a one-time windfall, then intake taxes annually on profits. Otherwise, it would be to the state's long-term advantage to hold the property as it produced a steady $600 million a year in profits. Akhmetov and Pinchuk, in an insiders' deal that was clearly rigged in their favor, had managed to pay only $800 million for the company in the initial privatization, a fraction of what it was really worth on the open market. When the reprivatization controversy was coming to a boil a year ago, speculation was that it might bring around $2 billion or maybe even as much as three times the rigged purchase price of $800 million. Nobody seemed to believe it could bring $3 billion dollars that I proposed as a minimum bid price. The actual price under what was widely hailed as an open, honest, and transparent bid and sale process: $4.8 billion, or six times what Akhmetov and Pinchuk paid."

Aside from Maidan's civic activists, we had few friends, having become an irritation not only to greedy oligarchs but our own governments who were definitely not there to help with our social enterprise efforts. Lord Mandelson became an advocate for Rinat Akhmetov and Tony Blair would find a sponsor for his 'Faith Foundation' in Viktor Pinchuk. 

I'm talking of half a million dollars to proselytize his belief rather than feed those who'd starved to death and been buried without ceremony in rough trenches. This "faith without works" from the man who made social enterprise UK government policy.

The subject of revolution arose recently in the world of social enterprise with Dr Pathik Pathak an academic from Southamption University who asserted that Russell Brand was leading disenfranchised youth down the revolutionary rabbit holes of utopia.

"Disruptive entrepreneurship shows us that something else is possible: systems can be imploded from within, small chinks in the general gloom can be generative catalysts for something more universal, and innovation by innovation we can remake the world to serve those who most deserve it, not those who inherit wealth or privilege.  Disruptive entrepreneurs have created business models which started life on the peripheries of the global economy but which are gradually, incrementally, transforming economic systems. "