Goldman Sachs loses $20 million fee for El Paso deal

NEW YORK Mon Sep 10, 2012 6:48pm EDT

A Goldman Sachs sign is seen over their kiosk on the floor of the New York Stock Exchange, April 26, 2010. REUTERS/Brendan McDermid

A Goldman Sachs sign is seen over their kiosk on the floor of the New York Stock Exchange, April 26, 2010.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - Goldman Sachs (GS.N) was not paid the $20 million fee it billed for advising El Paso Corp on its more than $20 billion sale to Kinder Morgan Inc (KMI.N) after the investment bank was accused of a conflict of interest in the sale.

El Paso shareholders sued Kinder Morgan after the deal, alleging that the sale was tainted by Goldman's involvement with both energy companies. While it was advising El Paso, Goldman had a multibillion-dollar stake in the acquirer and its top energy banker held a $340,000 personal stake in Kinder Morgan.

Kinder Morgan announced a $110 million settlement with the shareholders on Friday, and said "El Paso did not pay the $20 million fee or any indemnity payments allegedly owed to Goldman."

The deal closed in May. Delaware Chancery Court Judge Leo Strine refused to block the deal due to the conflicts, but criticized the negotiating process.

"At this stage, I cannot readily accept the notion that Goldman would not seek to maximize the value of its multibillion-dollar investment in Kinder Morgan at the expense of El Paso, but, at the same time, be so keen on obtaining an investment banking fee in the tens of millions," Strine wrote.

Goldman Sachs declined to comment on the matter.

(Reporting By Michael Erman; Editing by Phil Berlowitz)

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