Goldman Sachs has apparently managed to get itself out of a spot of hot water in Thailand after issuing a research report which dragged the finance minister into a row with a leading newspaper.
A parliamentary committee on fiscal, banking and financial institutions called for it to be "punished" for its research report issued earlier in the year in which it quoted finance minister Tarrin Nimmanahaeminda as urging the country's banks, including the largest Bangkok Bank, to take advantage of the government's bank recapitalization support programme.
The ensuing fuss resulted in a volatile spate of trading in Bangkok Bank shares, and a local Thai-language newspaper then picked-up on the research report and accused the minister of selling the country short - an accusation over which Tarrin threatened to sue.
Goldman Sachs officials in Bangkok and Hong Kong were unavailable for comment on the matter, and committee chairman Amnuay Yotsuk declined to elaborate on the censure of Goldman when contacted by Euromoney. Bangkok analysts meanwhile accused Goldman of being "a bit naive" in its writings, and it has since retracted its report and apologized, says one local broker.
The incident appears to have been settled, but not before the committee apparently suggested that Goldman's advisory role to the government be reconsidered. Officials from Bangkok Bank and the Thai Bankers' Association were also invited to attend the committee hearing, but the bank was reported to have declined to make an issue of the matter.
The Securities and Exchange Commission was also asked to investigate the report, but concluded there was little it could do because the report was issued from outside Thailand - from Hong Kong.
The saga serves to emphasize the delicate tightrope walked by investment banks in Asia, many of which are juggling the output of their securities research departments against the interests of investment banking divisions keen to advise on privatizations, restructurings and capital raisings.
And Goldman has additional interests in Thailand, having bid in a joint venture with GE Capital for a significant slice of the repackaged assets of the country's defunct finance companies, currently being auctioned off by the government.
It is not the first time that Goldman has incurred the wrath of the Thai government. In February 1997, before the baht was devalued, it was criticized for recommending investors pull out of Thailand. That report was questioned by government finance advisers and was criticized for renewing speculative attacks on the baht. A year later the investment bank was making local headlines again when it recommended investors remain underweight in Thai banking shares, but it praised the government for intervening in a number of the troubled banks and making moves to improve the regulatory environment. Gill Baker