Fraud case no barrier to bonuses

Days after being accused of securities fraud by United States regulators, Goldman Sachs is expected to earmark about US$5 billion ($7 billion) for staff pay and bonuses this week, fuelling the controversy over bankers' rewards in the teeth of the financial crisis.

Chief executive Lloyd Blankfein is expected to unveil revenues of US$11 billion for the first quarter of this year on Wednesday, up from US$9.4 billion in the same period of 2009.

About 47 per cent of that will go into a "compensation pool" for bosses and employees.

The bank has been aware of the Securities and Exchange Commission's (SEC) investigation for two years but has not spoken to investigators since September 2009 and is thought to have been surprised by the fraud complaint.

The charges are likely to have incurred the ire of US investor Warren Buffett, who lost more than US$1 billion on paper in 24 hours on warrants held by his Berkshire Hathaway investment fund as Goldman shares plunged.

Buffett endorsed the bank by loaning it US$5 billion at the height of the crisis at 10 per cent interest. He is an outspoken critic of Wall St sharp practice and excessive pay.

Senior Goldman executives have held talks with major investors, thought to include Buffett, over the SEC accusation.

Blankfein is also anticipating tough questioning later this month on Capitol Hill. Along with other financiers, he is expected to testify before the Senate's permanent subcommittee on investigations.

The panel's head, Democratic senator Carl Levin, said it had discovered levels of greed that were "frankly disgusting".

Goldman made record profits of US$13.4 billion last year, after net revenues more than doubled to US$45.2 billion, racking up at least US$100 million in net trading revenues every other working day.

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