Goldman Sachs CEO to sell big stake

Goldman Sachs chief executive Henry Paulson eased the way for his confirmation as US Treasury Secretary by agreeing to sell shares in the firm and a stake in a Chinese bank.

Paulson owned 3.23 million Goldman shares as of March, worth about US$485 million ($787 million) today, according to regulatory filings.

He's selling the stake as part of an agreement with the Office of Government Ethics, says White House spokeswoman Dana Perino.

He will also sell as much as US$25 million in a Goldman fund whose sole asset is a portion of Industrial & Commercial Bank of China (ICBC).

Both holdings might have provoked a clash with members of the Senate Finance Committee, which is set to meet next month to consider Paulson's nomination.

Before the White House announced Paulson's pledge to sell the ICBC interest on Wednesday night, at least one committee member said it was cause for concern.

Selling the stakes "makes it a lot simpler", said Michael Graetz, a former assistant Treasury Secretary.

Managing the relationship with China is becoming an increasingly important part of the Treasury Secretary's job as the trade deficit with China soars, last year reaching a record US$202 billion, and the Peoples Bank of China accumulates US Government debt.

President George W. Bush picked Paulson because of his expertise on China, Republicans said at the time the Goldman chief was nominated last month.

Administration officials traditionally sell investments that may present a conflict of interest, or put them in a blind trust.

The 294-page financial disclosure didn't say how Paulson plans to deal with his vast investments, which include hedge funds, private-equity funds and real estate. Outgoing Treasury Secretary John Snow agreed to sell his holdings in railroad firm CSX to avoid conflict of interest charges.

Paulson could be worth more than US$600 million, according to the disclosure statement and filings with the Securities and Exchange Commission.

Paulson liked to boast as Goldman chief that he visited China more than 70 times since 1990.

His role in US-China relations could become crucial after Robert Zoellick resigned as Deputy Secretary of State. Zoellick, who was State's point man on China, quit this week to go to Goldman.

- BLOOMBERG