Goldman Sachs bankers said to depart on guidelines breach

Three bankers have left Goldman Sachs Group Inc after the US firm determined they breached internal guidelines in connection with the bank's advisory role on the planned acquisition of a consumer company in the Middle East, according to people with knowledge of the matter.

PHOTO: REUTERS

FEB 12, 20164:09 PM

[LONDON] Three bankers have left Goldman Sachs Group Inc after the US firm determined they breached internal guidelines in connection with the bank's advisory role on the planned acquisition of a consumer company in the Middle East, according to people with knowledge of the matter.

The bankers who departed in December were involved in advising a potential buyer on an investment in fast-food company Kuwait Food Co, which operates KFC restaurants in the Middle East, said the people, who asked not to be identified because the matter is private. Two employees were based in Dubai and another in London, the people said.

Goldman Sachs determined that two of the bankers didn't identify themselves as bank employees at a meeting with the target company attended by other financial services firms, the people said.

The third banker was aware that colleagues participated in the meeting, two of the people said, and all three were deemed to not have adhered to the firm's internal guidelines. Other employees were also allegedly disciplined as a result of the incident.

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"We take these matters seriously and act appropriately based on the standards we expect of our people," Goldman Sachs said in a statement on Wednesday. The bank declined to name the employees or elaborate further.

Tighter Controls

Goldman Sachs set up a business-standards committee in 2010 that has emphasized the need for employees to be transparent with clients on the firm's role and potential conflicts of interest on transactions.

Global securities firms are tightening controls on staff and clamping down on potential violations and misconduct as legal costs spiral and as regulators take a harsher stance toward inappropriate behavior in the financial sector.

Last year, the bank dismissed about 20 analysts globally in offices including London and New York after discovering they had breached rules on internal training tests, said people familiar with the matter in October.

Goldman Sachs is advising a Dubai-based investor group led by Emaar Properties PJSC Chairman Mohamed Alabbar, which plans to buy a 69 per cent stake in Kuwait Food, known as Americana, according to the people.

The transaction was announced earlier this month. An e-mail to a representative for Emaar Properties wasn't immediately answered.

Americana, which couldn't be immediately reached for comment on the Goldman incident, operates restaurant franchises such as KFC, TGI Friday's and Pizza Hut in the Middle East and North Africa region. Founded in 1964, it also produces food including California Garden beans and Farm Frites frozen vegetables.

Goldman Sachs, the No 1 adviser on mergers in Middle East and Africa, generated US$3.47 billion globally in advisory fees for 2015, the most since 2007. The bank was the top-ranked adviser on mergers and acquisitions worldwide last year, according to data compiled by Bloomberg.

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