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These are stories Report on Business is following Wednesday, March 14, 2012. Get the top business stories through the day on BlackBerry or iPhone by our mobile-friendly webpage.

Executive slams Goldman Oh, to be a fly on the wall today in the corner offices at Goldman Sachs Group Inc. .

Greg Smith, who heads Goldman's U.S. equity derivatives business in Europe, Africa and the Middle East, is resigning today after almost 12 years with the Wall Street giant. He started as a summer intern, he says, and worked his way up to the position of executive director in London.

Mr. Smith chose to go out with a bang, and is the talk of Wall Street today with a scathing indictment of the firm on the Op-Ed pages of The New York Times. is flying through cyberspace, and is renewing controversy over Goldman and dredging up the crisis-era feelings about Wall Street that linger still.

"I can honestly say that the environment now is as toxic and destructive as I have ever seen it," Mr. Smith writes.

"To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world's largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for."

A company spokeswoman told me today that Goldman disagrees with Mr. Smith's views, and that his comments don't reflect the way the bank runs its business.

"In our view, we will only be successful if our clients are successful," she said in a statement that Goldman gave reporters. "This fundamental truth lies at the heart of how we conduct ourselves."

Mr. Smith cites chief executive officer Lloyd Blankfein and president Gary Cohn, saying the history books "may reflect" that they lost hold of Goldman's culture.

"I truly believe that this decline in the firm's moral fiber represents the single most serious threat to its long-run survival," he adds.

Mr. Smith discusses his career and how he mentored interns, advised big hedge funds and sovereign wealth funds, and amassed a client base with assets of more than $1-trillion (U.S.).

"I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work."

Mr. Smith laments the loss of Goldman's teamwork, and its "spirit of humility and always doing right by our clients." The culture at the time was the "secret sauce" that made Goldman great.

"It makes me ill how callously people talk about ripping their clients off," he writes.

"Over the last 12 months I have seen five different managing directors refer to their own clients as "muppets," sometimes over internal e-mail ... Now project 10 years into the future: You don't have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about 'muppets, 'ripping eyeballs out' and 'getting paid' doesn't exactly turn into a model citizen."

(Muppets, by the way, are dunces.)

Mr. Smith also recounts the proudest moments of his life, including his scholarship to Stanford, his selection as a Rhodes Scholar finalist, and his bronze medal at ping pong in the Maccabiah Games in Israel. He doesn't say how much money he made in his dozen years at Goldman.

Mr. Blankfein and Mr. Cohn issued a memo to their staff today, according to a copy obtained by The Wall Street Journal, saying they were disappointed by the comments, which "do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."

"Our firm has had its share of challenges during and after the financial crisis, but your pride in Goldman Sachs is clear," they said, citing a recent staff survey.

Based on their comments, it appears to be a memo designed to be leaked.

"And, what do our people think about how we interact with our clients? Across the firm at all levels, 89 percent of you said that that the firm provides exceptional service to them. For the group of nearly 12,000 vice presidents, of which the author of today's commentary was, that number was similarly high."

Mr. Smith's public comments had an impact around the world.

"This will certainly be damaging for the firm," John Purcell of executive search firm Purcell & Co., told Bloomberg News. "It's obviously a very heartfelt piece. Maybe he's made a sufficient amount of money in his life that he isn't particularly bothered if he isn't employed in financial services again and works in a completely different world like teaching."

Ottawa opens telecom door The Canadian government is opening the door to more foreign ownership of wireless companies, a move that would allow non-Canadians to own 100 per cent of firms with a market share of 10 per cent or less.

It says this exemption from foreign investment restrictions would continue even if these companies grow naturally to occupy more than 10 per cent of the market, but would not if these firms get bigger through mergers or takeovers, The Globe and Mail's Steven Chase and Iain Marlow report.

Current federal law restricts direct and indirect foreign investment in telecom companies to a combined total of 46.7 per cent.

The government also announced it would not set aside spectrum for smaller players, as the government did in 2008, for the 700 MHz frequency auction or for the 2,500 MHz auction expected to follow within a year later.

Mega Brands slips Canada's Mega Brands Inc. posted a dip in profit and revenue in the fourth quarter, hurt by lower than expected toy sales in the United States, sparking a plunge in its stock price today.

Profit slipped to $234,000 (U.S.) or a penny a share from $11.3-million or 70 cents a year earlier. Sales fell to $108.5-million from $111.8-million.

"The fourth quarter numbers were not up to expectations despite a strong sell-through of our construction toys at retail and good improvement in stationery and activity," said chief executive Marc Bertrand.

The company's troubles, he added, mirror those of most U.S.-based toy makers.

What to make of the stress tests The stress tests that set the markets surging late yesterday were deemed to be rigorous and credible, but was the focus correct? Some observers think not.

U.S. bank stocks soared as North American markets headed toward their close, after JPMorgan Chase & Co. was first out of the gate to announce that the Federal Reserve had approved its plans to hike its dividend and launch a huge stock buyback. Several others followed suit, including U.S. Bancorp and Wells Fargo & Co.

Over all, The Globe and Mail's Grant Robertson writes in today's Report on Business, 15 of 19 banks passed the tests. That means that they can withstand a crippling scenario even after accounting for dividends and buybacks and the like.

Four others, notably Citigroup Inc. didn't meet the same threshold.

Many analysts noted that the test results were strong, though Derek Holt and Dov Zigler questioned the focus.

"The majority of banks passed onerous stress testing scenarios on capital positions and still met minimum capital requirements," they said today.

"Recall, however, that it was liquidity that really damaged the banks into the crisis as capital ratios were reasonably solid going into the downturn. In that sense, we may still be testing the ratios that don't cause the largest problems in a shock-driven liquidity freeze in funding markets."

Brookfield teams with Hillwood Canada's Brookfield Asset Management is teaming up with a U.S. developer in a deal to buy up and develop industrial properties in the United States.

Brookfield and Hillwood, which is owned by Ross Perot Jr., are looking primarily at big warehouses. With an equity commitment of $400-million (U.S.), the two companies said today they will deploy up to $1-billion within the initial three years.

"The partnership represents one of the more significant commitments to U.S. industrial real estate since the economic downturn that began in 2008," they said in their statement.

"With a wealth of combined experience in investments, acquisitions, development, finance, accounting, legal, leasing and property and asset management, the partnership has the resources and expertise to establish a significant presence in the industrial warehouse market."

Brookfield is not new to this market, and the two have already purchased a property in California.

"The partnership is seeking returns of 13 per cent to 16 per cent through investments in value-added properties that suffer from low occupancy and/or have a troubled capital structure," said Desjardins analyst Michael Goldberg.

"The typical deal size is expected to be $20-million to $60-million, and the partnership anticipates holding properties for three to five years," he said in a research note.

"This joint venture is in line with BAM's strategy of being a global asset management business with flagship public entities in each of its pure-play entities - infrastructure, power and property," Mr. Goldberg added, referring to Brookfield by its stock symbol.

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