They have been called the “hunger bonds” by Harvard scholar Ricardo Hausmann, and the sting has stuck. At least enough to make bitter what could have been a very suit deal for Goldman Sachs: $2.8bn issued by Venezuela’s state-owned oil company, PDVSA, at a price of only $865m. Because of its focus on making money for investors, Goldman’s Asset Management Unit is inherently shortsighted to detect ethics flaws or financial hazards. What it did was extend a cash line to Venezuelan tyrant Nicolas Maduro and help him survive (and by violently repriming the opposition and literally killing its people of hunger, perhaps remain in power time enough to repay the debt). So far, Venezuela’s regime has been good at paying its debts even if it comes at a harsh price for its people. The financial firm has tried deflecting criticism firstly by saying that it bought the bonds through an intermediary and that the process wasn’t vetted by its high executives, not even by the heads of the unit of assets management; and secondly by asserting their faith in a better future for Venezuela. In any case, the move has jeopardized Goldman’s efforts to mend its reputation.
But although Goldman’s big bet has monopolized media attention, it is also true that, besides asset managers, index makers, exchange-traded funds providers, and of course, their investors have all been reaping the benefits out of Venezuelans suffering in many other current and past transactions. Hausmann has proposed a solution to prevent future financing of a heinous regime: the financial community could remove Venezuela’s funds from market indexes. It can’t be business as usual with Caracas if Wall Street want to present itself as socially responsible. If Haussmann is listened to a new tool to promote human rights and democratic values will have born.