Goldman Sachs

When a company’s largest patron has a purse of $240 billion, that patron has the attention of the corporate chieftains. Goldman Sachs was no different. History suggests that at least four key senior executives at Goldman Sachs were involved in the 1991 covert assault on the Soviet economy using the Marcos gold.

 Robert Hormats earned his credentials for covert operations on the staff of the National Security Council from 1969 to 1977, where he worked for Henry Kissinger. From there, he moved into a number of key State Department roles. During the late 1980s’s he was a key advisor to George H.W. Bush. From 1982 to 1987 he was vice president of international corporate finance at Goldman Sachs, and after that became co-chair of Goldman Sachs International, a position he continue to hold. Subsequent to the September 1991 bond issuance, it would be Robert Hormats who would be Yeltsin’s choice to head up the ‘privatization’ of the Soviet economy.127 Hormats presided over the opening ceremony for the Russian privatization group, and left the work to his staff.

 Robert Rubin – who, with Stephen Friedman, was identified by D’Aqusito as the Goldman Sachs overseers of the bonds deal, and to whom he appealed when Goldman Sachs apparently shorted D’Aqusito on his commission. Rubin was co- chairman of Goldman Sachs at the time, and head of the Russia Department.128 Rubin would shortly thereafter move on to become National Economic Policy Advisor, Treasury Secretary and Chairman of Citigroup – with the latter two roles being key to managing the Yamashita/Marcos/Black Eagle Fund. While National Economic Policy Advisor and Treasury Secretary, Rubin was the key architect of the deregulation of financial services in 1998 that paved the way for the 2008 crisis. He was also named by the Marketing Director of the Arkansas Development Finance Authority (ADFA) as the key Goldman Sachs player in a money laundering deal involving Sanwa Bank, AIG, Coral Reinsurance and ADFA.(More on this further down.)

 Stephen Friedman- was identified by D’Aqusito as one of the Goldman Sachs overseers of the deal, and to whom he appealed when Goldman Sachs apparently shorted D’Aqusito; Friedman would leave his lucrative position as Chairman at Goldman Sachs in 1994 to become a public servant on the Board of Fannie Mae from 1996-2002, and under George W Bush would become Chairman of the United States President's Foreign Intelligence Advisory Board and would take on “a major role in shaping the chief executive's future economic strategy and policy.” In January, 2008 he moved on to be Chairman of the Federal Reserve Bank of New York, with the latter role being key to managing the Yamashita/Marcos/Black Eagle Fund.

 Robert Zoellick was Undersecretary of State in 1991, and helped pave the way for the financial collapse of Gorbachev by providing conditions to encourage his ouster. Zoellick did so by killing the proposal for a $60 billion food aid package to the Soviets while serving as the President's personal representative for the G7 Economic Summits in 1991 and 1992.129 Zoellick was also a cosigner of documents for the Project for the New American Century, urging war with Iraq. During George H. W. Bush's presidency, Zoellick served with Secretary of State James Baker as Under Secretary of State for Economic and Agricultural Affairs, as well as Counselor to the Department. In August 1992, Ambassador Zoellick was appointed White House Deputy Chief of Staff and Assistant to the President. Zoellick also served as the John M. Olin Professor of National Security at the U.S. Naval Academy . 130 Zoellick had been a managing director at Goldman Sachs.

These four men would lead Goldman Sachs into two decades of control over U.S. economic policy and financial regulatory power. They would bring with them at least 13 major players from Goldman Sachs, (not to mention a host of up to 27 minor Treasury officials) and mentor a host of collaborators. However, it was not just the 1991 bond deal that allowed them to grab hold of the reins of American power. Goldman Sachs’ path to power in the Whitehouse was in fact a dual path, which needs to be clarified. In addition to the 1991 bond deal with George H.W. Bush as the sponsor, Goldman Sachs was also laying a foundation to help bring Governor Bill Clinton to power. It did so in three ways.

1. Goldman helped Clinton by arranging financing for the Arkansas Finance Development Authority. In a rather odd scheme, Goldman Sachs provided Clinton with $400 million of financing for his Arkansas Development Finance Authority, which then handed out $90 million in loans.131 For a number of years, AFDA bond financing was managed through two of Clinton’s close personal associates. When an investigation into AFDA’s finances was threatened, Clinton sough to have the AFDA sell its bonds through more traditional channels, such as Goldman Sachs.132

2. Second, by involving the AFDA in a rather fraudulent stock deal. Between 1987 and 1992, Goldman Sachs proposed and arranged a suspicious $5 million gift for the Arkansas Finance Development Authority (AFDA), in a transaction which later was exposed as either a major money-laundering operation or Enron type arrangement for AIG, which allowed AIG to set up one of its many re-insurance fronts. These re-insurance shells allowed U.S. corporate owners to avoid taxes and hide revenue off-shore.133 It is suggested that the $5 million brought the ‘street credibility’ of Clinton and the AFDA to the deal and attracted other major investors to a deal which was valued well over $60 million. AIG, in its turn, would end up holding over $1 Billion in AFDA bonds. 134

3. Third, by providing significant campaign contributions to his run at the Presidency.135

What is critical to understanding these seemingly side-line bits of news is that the ADFA was used to launder both CIA drug money and Black Eagle fund assets, and that Goldman Sachs (and AIG) was a facilitator in both cases

 The AFDA was the creation of Governor Clinton, with the legal guidance of Webster Hubbell. (Hubbell and his father got one of the first loans for $2.85 Million, which apparently was never repaid.136) The AFDA had unilateral authority to create and sell bonds backed by the taxpayers of Arkansas, and there was absolutely no regulatory authority by any state or federal agency to watch its books. Not even the State auditor was allowed to look at their books. Clinton would appoint the Board Directors at his leisure. The AFDA had the absolute ability to sell bonds, make loans on the basis of any criteria chosen, and allow the recipients of those loans to default. It is contended that many of the recipients of those loans made significant contributions to the Clinton campaigns. It is also contended that a tens of millions of dollars of the bonds were purchased with drug money from the CIA-Mena drug operation that supported the Nicaraguan Contras, in violation of law.137 Accordingly, it has long been speculated that Clinton, AIG, the CIA and Goldman Sachs were using the ADFA to launder CIA drug money, and the pay-off for the Clintons was an ability to finance their political campaigns.

 The bank that provided the funding for the deal proposed by Goldman Sachs was the Chicago Branch of the Sanwa Bank. The Sanwa Bank is the repository of the Showa Trust, created with Yamashita gold in the aftermath of World War II by Robert B. Anderson. It was Secretary of the Navy Robert B. Anderson, Secretary of War Henry L. Stimson, and Secretary of War John J. McCloy who created the Black Eagle Trust.138 _. _Robert Anderson would go on to be a post-War U.S. intelligence asset, operate the Commercial Exchange Bank in the British West Indies, be convicted of running illegal banking operations and tax evasion, and be sentenced to prison.139 By the mid 1980s’ the Showa Trust he created was generating over a billion dollars a year in interest.140

 It was only after several state insurance agencies investigated AIG’s wholly owned re-insurance operation in Barbados that AIG’s holding of over $1 Billion in ADFA bonds came to light. Larry Nichols, the Sales and Marketing Director for ADFA has repeatedly stated he could never locate a single owner of ADFA bonds, and that during this period, the bonds were a vehicle for laundering CIA drug earnings in support of the Contras.141 This leads to the conclusion that AIG was picking up these ADFA bonds as part of the money laundering operation. In the early days, ADFA’s bond writers were Dan Lasater (indicted in 1986 for drug trafficking) and Jackson Stephens, the banker that arranged for BCCI to set up operations in the U.S.142 The actual cash exchanged for the bonds ended up in the Garfield Ridge Trust – a Chicago Savings and Loan bank.143

 The Garfield Ridge Trust went bankrupt as a result of its bond deals with Lasater. The U.S. Resolution Trust Corporation (RTC) took over the clean-up, but in this case, RTC’s attorney’s ‘subcontracted’ the clean-up to Rose Law Firm, where the case was handled by Hillary Clinton and Vince Foster.

“For several years, RTC's major outside attorneys were the Chicago-based firm of Hopkins & Sutter. So important was the law firm, RTC's offices were actually ‘inside’ Hopkin's Chicago office. Hopkins & Sutter, for RTC, arranged for two members of a distant law firm, namely Hillary Rodham Clinton and Vincent Foster, Jr., of the Rose Law Firm of Little Rock, to work the clean-up details of a defunct savings and loan of a west suburb of Chicago. The S&L;, owned by former Illinois Governor Dan Walker, Sr., went under in part because of corrupt bond deals done

with the Clinton business crony, Dan Lasater.” 144

 Bill Clinton’s Presidential campaign was funded in a major way by the ADFA, Jackson Stevens (BCCI front man) and Goldman Sachs.145 In an eerie parallel, just like Russian oligarch Alexndre Konaykhine and KGB Generals Kondaurov and Bobkov used funding from the 1991 bond deal to finance Yeltsin’s successful campaign, Clinton too came out from the hinterlands and political backwaters (as did Yeltsin) with illegal CIA funding, facilitated by Goldman Sachs.146 Clinton himself would be on the verge of declaring personal bankruptcy in 1996 (due to legal fees) and ten years later somehow be worth over $100 million, without really ‘working.’

When the 1991 covert war funded by the September 1991 bond deal is compared to the political developments in Arkansas in the late 1980s, there are remarkable similarities:

 The use of covert operations funds channeled through bankers to bring relative political unknowns (to the national political scene) to the Presidency of a global power;

 The use of Goldman Sachs to lend respectability and credibility to the illegal money movements;

 The willingness of Goldman Sachs to arrange financing for bonds to support illegal covert operations;

 The multiple suicides and violent deaths of participants and investigators of those illegal operations; and

 The massive loan defaults (on payoffs and bribes masquerading as loans or nontaxable income) forcing the closing of banks and losses to legitimate bank investors.

It is no wonder that Anne Williamson, in testifying before Congress summarized the Russian situation with the following words: “ In short, the Russian bond market was the Arkansas Development Finance Authority gone international. " 147

In the aftermath of Arkansas and Russian bond deals, Goldman Sachs bankers, in what is described as a ‘revolving door with the Whitehouse’ began to accumulate power by managing the international financial bailouts.148 Many of them had their careers founded in U.S. intelligence operations, and virtually all of them would play a key role in leading the world economy to crisis in 2008. Additional privateers with Goldman Sachs include:

 Hans Reich was also directly involved in the 1991 bond deal, being the person to whom D’Acquisto addressed his appeal on the theft of his commission. Reich had joined Goldman Sachs in the Compliance Department three years earlier, and left in 2004 after serving as Vice President in Global Compliance. In leaving Goldman Sachs, he became head of eastern region National Association of Securities Dealers, Inc (NASD), now called Financial Industry Regulatory Authority (FINRA) – a quasi government agency controlled by the SEC with regulations subject to the Federal Register announcement process.

“NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services” 149

Under his leadership, FINRA has been the subject of criticism, suggesting it has reduced regulatory actions and turned a blind eye to abuses by big investment houses. One report summarized the criticism by noting “data suggest that securities regulators may have retrenched their efforts to regulate through the use of novel theories” rather than penalties.” 150

 Kenneth D. Brody, member of Goldman, Sachs & Co. from 1971 to 1991, where he was elected partner in 1978 and member of the management committee in 1990. He became head of Export-Import bank under Clinton. While in charge of the Export- Import Bank, supported nearly $4 billion of Enron deals in India, Philippines, Turkey and China..151

 Gary Gensler, former Goldman partner who became undersecretary of the Treasury for Clinton, argued in 2000 that Congress should rein in Freddie and Fannie.152

“Gensler was a top negotiator for the White House in discussions with Congress in support of the now-controversial Commodity Modernization Futures Act of 2000. The law largely prevented the SEC and the CFTC from regulating credit default swaps and other complex instruments that would later wreak havoc with financial markets. Gensler also played a prominent role in batting down an effort by the CFTC to regulate these derivatives. .”153

 CIA Inspector General Frederick P. Hitz, who retired from the CIA and assumed the Goldman Sachs chair on International Intelligence at Princeton University in May of 1998.154

 Henry Paulson, Secretary of Treasury since May of 2006, had been at Goldman Sachs from 1974 to 1998 and followed in the footsteps of Rubin and Friedman, a Chairman/CEO of Goldman Sachs, but was co head of Investment Banking of Goldman’s in September 1991. Prior to Goldman Sachs, Paulson served as Staff Assistant to the Assistant Secretary of Defense at the Pentagon (1970 to 1972) and then worked John Ehrlichman from 1972 to 1973 on President Richard Nixon’s staff, where he earned his covert operations credentials, and got connected to the Kissinger crowd. He was a major player in 2004 in getting the reserve ratios of the investment banks reduced.

 Neel Kashkari, a Vice President at Goldman Sachs before he signed on at the Treasury Department in July of 2006.

 Faryar Shirzad, former White House Deputy Assistant for International Economic Affairs to President George W. Bush and the Deputy National Security Advisor for International Economic Affairs, serving in this role from 2004 to 2006.

 E. Gerald Corrigan, head of the Federal Reserve Bank of New York during the 1991 bond deal.

 William Dudley, Chief Economist, partner and managing director at Goldman Sachs left to head the Federal Reserve Bank of New York where he became executive vice president of the Markets Group at the Federal Reserve Bank of New York and manager of the System Open Market Account for the Federal Open Market Committee. The Markets Group oversees domestic open market and foreign exchange trading operations and the provisions of account services to foreign central banks, and is a key step ion processing ESF funds.

 Reuben Jeffery, the chairman of the Commodity Futures Trading Commission formerly Under Secretary for Economic, Energy and Agricultural Affairs, serving previously as the senior economic official at the State Department, and as the Special Assistant to the President and Senior Director for International Economic Affairs at the National Security Council. Jeffery also acted as the Representative and Executive Director of the Coalition Provisional Authority Office (CPA) at the Pentagon, after having served as an advisor to Ambassador Bremer in Iraq. Prior to his ‘public’ service, Jeffery spent eighteen years working for Goldman, Sachs & Co., where he was managing partner of Goldman Sachs in Paris (1997-2001) and of the firm’s European Financial Institutions Group (1992-1997)

 Josh Bolten, whose father (Seymour Bolten) worked in ‘espionage’ at the CIA, served as Executive Director for Legal and Government Affairs at Goldman Sachs in London from 1994 to 1999. In the 1990s. Other roles of note plated by Bolten include working with the Project for the New American Century (PNAC)155 and early in his career, earning his covert operations credentials under Henry Kissinger as Executive Assistant to the Director of the Kissinger Commission on Central America . 156

 Robert Steel, the former Goldman vice-chairman, started with Goldman Sachs in 1977, and was responsible for their European “privatization” projects between 1986 and 1994. Steel was appointed Under Secretary for Domestic Finance in the Department of the Treasury in 2006, and served until July 9, 2008. As undersecretary, he and Henry Paulson -another Goldman Sachs executive “tried to arrange a $100 Billion “bailout” for Goldman Sachs. 157 He was also a spokesperson for Goldman Sachs on hedge fund regulatory issues.158

 Randall Fort, is an ex-Goldman director of global security who advises Condoleezza Rice, the secretary of state. At Goldman Sachs from 1996-2006, he served in several capacities, including as Director of Global Security, where he managed all physical and personnel security measures, and also as chief of staff to the President and co- Chief Operating Officer of the firm. Fort had extensive intelligence background prior to his role at Goldman-Sachs, including Deputy Assistant Secretary for Functional Analysis and Research in the Bureau of Intelligence and Research at the Department of State(1989-93), Special Assistant to the Secretary for National Security and Director of the Office of Intelligence Support at the Department of the Treasury (1987-89), Deputy Executive Director, of the President’s Foreign Intelligence Advisory Board (PFIAB) at the White House (1982-87).

 James Johnson served as president and CEO of quasi-government housing lender Fannie Mae from 1991 to 1998, prior to which he was a managing director of Lehman Brothers (1985-1990.) While at Fannie Mae, he was accused of accounting irregularities that underreported his own income by $14 million. (Report of the Special Examination of Fannie Mae, May 2006) In a most interesting transition, he then joined Goldman-Sachs to become a director of their compensation committee.