Goldman Sach's Backpage Panic Is Real, Costly

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It's not quite enough to make one feel bad for Goldman Sachs, but the panic kicked off by Nicholas Kristof's reporting on the investment bank's stake in was so obvious we're inclined to believe the firm might not have known the extent of the site's alleged facilitation of sex trafficking. Kristof's own reporting makes that pretty clear: In his New York Times column this weekend, he wrote that, "Goldman Sachs was mortified when I began inquiring last week about its stake in America’s leading Web site for prostitution ads." By Friday, the company had hastily dumped its 16 percent stake in Backpage owner Village Voice Media, losing most of its $30 million investment, according to Reuters. In a blog post following up on Sunday's column, Kristof almost seemed to feel bad for taking Goldman by surprise: "I don’t think senior managers at Goldman knew that they were part owners of a company that is tied to sex trafficking, and I don’t want to demonize the company just because it is so, well, demonizable."

Regardless of what Goldman knew and when it knew it, the story does a lot more damage to Village Voice Media than it does to Goldman. While that $30 million is a lot, it's a drop in the bucket for the multi-billion-dollar firm. Meanwhile, it's cost VVM a major investor and put allegations that Backpage facilitates sex trafficking and child prostitution back in the news. Kristof's been waging a campaign against Backpage for a couple of months now, starting with a mention in his Jan. 25 column, "How Pimps Use the Web to Sell Girls," and continuing with a much more blistering expose on March 17. VVM challenged Kristof on that one, kicking off a feud between the alt-weekly chain and the Times columnist. But in the latest round of reporting, the news is much more straightforward and damning. Even though VVM consistently denies that it knowingly facilitates sex trafficking, the fact that one of its investors dropped it so quickly speaks much louder than even its front page damnations of past critics.

This article is from the archive of our partner The Wire.