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Friday, July 21, 2017

Goldman Sachs reaches out to Rick Scott on Venezuela

Posted By on Fri, Jul 21, 2017 at 10:05 AM

Goldman Sachs Asset Management, which has taken heat for its purchase of $2.8 billion in bonds of Venezuela's state-run oil company, is working behind the scenes as Gov. Rick Scott seeks to prevent Florida from doing business with entities supporting the Maduro regime.

Scott hasn't outlined details of the proposal he intends to put before the state Cabinet on Aug. 16. But just saying he wants to make a change that could affect the state's investments has drawn attention from the Wall Street firm.



A revision to Scott's daily schedule on Wednesday included a meeting in Jacksonville with two officials from Goldman Sachs Asset Management.

The meeting was requested by Goldman Sachs “to discuss his upcoming policy to prohibit Florida from doing business with anyone who supports the brutal Maduro regime,” Scott spokesman John Tupps said Thursday.

A spokesman for Goldman Sachs confirmed the origin of the meeting, while noting that Scott has never directly named Goldman Sachs in his statements regarding Venezuela.

“We appreciate the opportunity to visit with Gov. Scott, who has been a leader for all concerned about the situation in Venezuela,” Goldman Sachs spokesman Michael Duvally said in a statement. “We share that concern and let him know that we do not support the Maduro regime and will not do business with it.”

As part of the company's statement, Goldman Sachs listed a series of bullet-point “facts.”

One noted it had purchased the bonds in May on behalf of clients through a broker in the secondary market. The bonds were initially issued in 2014 by Petroleos de Venezuela. Goldman Sachs also said many asset managers make similar investments for clients that own mutual funds, index funds and exchange-traded funds.

“We learned a great deal from the reaction to the investment and enhanced our investment process to consider a broader array of risk and meet our fiduciary responsibilities,” the company said in the facts.

As of early this month, Goldman Sachs, an investment manager of part of what is known as Florida's “long duration portfolio,” had an allocation from the state of $478 million, according to the state chief financial officer. The overall portfolio included $8.2 billion.

In another possible sign of Goldman Sachs' attention to the issue, the company has recently hired lobbyists Hayden Dempsey and Fred Karlinsky of the Greenberg Traurig law firm.

Dempsey is well known to Scott, having served as his special counsel, overseeing legislative affairs and assisting in policy development, during the governor's first year in office.

Karlinsky, a major Scott political fundraiser who served as co-chairman of Scott's second inaugural, serves as one of Scott's picks on the state Constitution Revision Commission.

Scott and a number of other Florida politicians from both parties have been ratcheting up their criticism of the Maduro regime since a high-profile attack on Venezuela's opposition-controlled National Assembly on July 6, the nation's independence day.

State Sen. Victor Torres, D-Orlando, lent support Thursday to the idea of economic sanctions against Venezuela. Torres said Venezuelan voters this week opposed efforts by Maduro to rewrite the country's Constitution.

“The voices of the Venezuelan people spoke with unanimity in their desire to preserve their national freedom and an open society,” Torres said in a prepared statement. “We should all stand with the citizens and demand the current leadership abide by the will of the people.”

At the Aug. 16 Florida Cabinet meeting, Scott intends to ask trustees of the State Board of Administration — comprised of himself, Attorney General Pam Bondi and Chief Financial Officer Jimmy Patronis — to prohibit the state from doing business with any organization supporting the Maduro regime.

Scott hasn't said if his plans will result in divesting from existing contracts and agreements or simply from making future deals.

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