At least one large financial securities firm is being accused
of conflict of interest in some high-profile transactions involving privatized U.S. infrastructure.
Goldman Sachs Group Inc., one of the world’s top profit-making securities
firms, has been called out by Illinois state officials for working a deal on
the back end of a potential transaction to privatize Midway Airport.
that financial advisor Goldman Sachs was planning on advising Chicago officials
on the possible sale of Midway to a private investor. But Chicago officials
found out that the firm was, at the same time, trying to buy a European
airport-investment company that planned to bid on the Midway deal.
Chicago Chief Financial Officer Dana Levenson, according to Bloomberg, abruptly halted Goldman Sachs’ role as financial advisor in April on the Midway deal.
“If we think anything could hinder us from maximizing proceeds, we have
to fix the situation. And that may involve making sure our advisors don’t have
conflicts,” Levenson told a Bloomberg reporter.
A Goldman Sachs spokesman said the firm’s clients, more and more, are
asking for financial advice but also for investment opportunities.
“We take conflict and business selection issues seriously and carefully
think them through each situation,” spokesman Michael DuVally said in a
statement to Bloomberg.
The financial market for the privatization of U.S. infrastructure, including toll roads, airports, rail lines and ports is growing.
Companies like Goldman Sachs, JPMorgan Chase & Co., U.S. Bank and
Morgan Stanley are reported to have “infrastructure funds” growing in accounts
for such investment opportunities.
But they are also the financial advisors on some of the biggest deals
to date, such as the $3.85 billion Indiana Toll Road transaction. Goldman Sachs
reportedly made $20 million on that transaction involving the state and
investment consortium ITR Concession Co., consisting of Cintra of Spain and
Macquarie of Australia.
ITR Concession Company has control over the Indiana Toll Road and toll
revenue for 75 years in the agreement.