Sunday, April 1, 2012

Kristof, Goldman Sachs, Sex Trafficking & Investor Responsibility

I know I usually write more light-hearted stuff and pepper my posts with musical allusions. Not this time.

Yesterday Nick Kristof wrote a story (found here: linking Goldman Sachs to trafficking in under-age sex trade. His piece asserts that Goldman 16% equity stake in and board seat at a private company that has 70% of the market for prostitution ads and has been roundly criticized for facilitating under-age sex trafficking. Goldman issues a statement saying it had no ability to influence management. Bull crap. I'd like any VC who ever owned stakes of greater than 10% and a board seat in any company to tell me that if they caught wind of horrific illegalities and human rights abuses at a portfolio company they wouldn't be all over that! One of the nice things about VCs is their ability to have an influence that's usually positive, especially where illegality and fraud are concerned -- ever see a VC catch wind of potential tax abuse at a company? Whatever flaws the venture community has, tolerating illegality isn't one of them, let alone tolerating human rights abuses.
Goldman's blind eye here is unforgivable. I reject the response on Good Men (which Kristof, who likes a fair fight, tweeted so that people could continue the debate) essentially trying to exculpate Goldman (found here Goldman had a diligence obligation and sat on the board for years while the company choked down revenues from despicable exploitation.

Goldman is now in the process of dumping its shares, along with a few other embarrassed stockholders. Again, Kristof is dead on accurate: "If the minority shareholders, Goldman included, worked together instead of rushing for the exits, they might be able to pressure Village Voice Media to get out of escort ads."

This sort of trafficking and prostitution more generally are very complex issues no doubt. Nonetheless, shame on Goldman, again. Goldman: use your position to make a change here, not too do a "walk of shame" as you run from an investment you've held for years -- years during which you were on notice or damn well should have been.

No comments:

Post a Comment