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7/10/16

Financial Industry: Conflict of Interest? Goldman Sachs hires former EU chief Barroso

Goldman Sachs (GS.N) has hired former European Commission President Jose Manuel Barroso to be an advisor and non-executive chairman of its international business, the U.S. bank said on Friday, as it grapples with the fallout from Britain’s exit from the European Union.

Barroso served as president of the commission, the EU’s executive arm, from 2004 to 2014 and was prime minister of Portugal from 2002 to 2004, Goldman said in a statement.

Goldman Sachs and other U.S. investment banks are seen as particularly vulnerable to Brexit since they rely on the EU’s “passporting” regime that allows them to offer services across the bloc while basing most of their staff and operations in the UK. Banks have warned that if their British outposts lose their “passports” they will have to move some employees and business units to alternative bases in the EU.

Goldman Sachs International, which Barroso will chair, is headquartered in London and of its roughly 6,000 staff fewer than 1,000 are based outside Britain.

Barroso is credited with helping the euro zone survive the 2009-13 debt crisis by establishing a financial rescue fund, enacting stricter budget rules and tightening financial regulation.

He was also a signatory to the Lisbon Treaty that revamped the bloc’s complex institutions after French and Dutch voters rejected a European constitution.

Barroso will help the firm as it advises clients on dealing with the ensuing “challenging and uncertain economic and market environment,” Goldman Sachs International co-chiefs Michael Sherwood and Richard Gnodde said in the statement.

The question which obviously immediately arises following Mr.Barroso's employment by the US financial giant Goldman Sachs is that of conflict of interest, given the stature former European Commission President Jose Manuel Barroso had in the EU and, consequently, the confidential information available to him about EU member nations classified financial and economic data.  
 
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