The Central Labourers’ Pension Fund filed the lawsuit in the Supreme Court of New York on Thursday, saying that Goldman Sachs continued to pay out lavish bonuses despite receiving a $10bn bailout from the US government.

“Defendants’ conduct shows that, even though Goldman is supposedly owned by public shareholders, defendants have scant regard for the interests of those shareholders,” the plaintiff said in the suit.

It also claimed the company was on track to pay employees $22bn in 2009, despite previously requiring a $10bn injection from the federal government’s Troubled Asset Relief Program and receiving $13bn from insurer AIG after the government bailed it out.

But Ed Canaday, the Goldman Sachs spokesman, said in a statement that “the suit is completely without merit”.

Bailout repaid

In June last year, the New York-based bank repaid the bailout money to the government.

Goldman received the government funds in October 2008 as part of the Troubled Asset Relief Programme (Tarp), a US government plan which provided banks with capital in exchange for preferred stock and warrants to purchase common shares.

The programme was launched after the Lehman Brothers investment bank collapsed and insurer American International Group needed a government bailout to remain in business.

The government investment included certain restrictions, such as caps on executive compensation, but these ended when Goldman Sachs repaid the $10bn.

Papandreou’s remarks came as a team of IMF experts, requested by Greece’s finance ministry, launched a week-long mission to the country on Wednesday to help restore its battered economy.

“There is no case of Greece leaving the eurozone or resorting to other kinds of help, such as the IMF,” Papandreou told a news conference on Wednesday, marking 100 days since his Socialist government was elected to power.

“We want to establish a sense of trust and certainty among our creditors,” he said.

‘Severe irregularities’

The IMF mission will provide technical assistance and advice on areas including how to create a new taxation system, budget management and pension reform.

The mission follows a visit by experts from the European Commission, the EU executive, and European Central Bank (ECB) last week, to examine Greece’s public finances.

The European Union experts released their report on the visit on Wednesday in which they highlighted “severe irregularities” in the country’s accounting procedures.

Eurostat, the EU’s statistical office, criticised the fact that Greece had revised its public budget deficit last year from 3.7 per cent of total output (GDP) to 12.7 per cent and said political interference meant the country’s data was not reliable.

The report raised fears that the crisis could worsen and increased the possibility of the EU executive launching infringement proceedings against Greece.

Austerity measures

Last month, Greece saw its credit rating downgraded by all three major rating agencies and is under pressure from the EU to cut its budget deficit.

Both the ECB and the Spanish presidency of the EU have warned Greece that it should not expect a bailout from the bloc and have put pressure on Athens to put its public finances in order.

Speaking in Athens during a visit on Tuesday, Herman van Rompuy, the EU’s new president, said he had confidence in Greece’s efforts to handle the issue.

Greece’s revised public deficit of 12.7 per cent is far above the EU’s accepted limit of three per cent and concerns over the country’s financial stability have already shaken the euro, the EU’s common currency.

Over the next few weeks, the Greek government will present an austerity plan for analysis by the EU’s executive.

Lambasting bankers for their “massive profits and obscene bonuses”, Barack Obama vowed on Thursday to “recover every single dime” the government spent rescuing the financial sector from its worst crisis since the Great Depression.

“We want our money back and we are going to get it,” Obama said, labelling the bailout as necessary but “distasteful” and adding that it left the sector with a heavy duty to taxpayers.

“My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people,” Obama told reporters at a White House event.

Full details of the fee proposal will not be laid out until Obama delivers his budget for fiscal 2011 in early February, but the aim of the plan is to recoup losses from the $700bn rescue programme of US banks called the Troubled Asset Relief Programme (Tarp).

It calls for a levy of 0.15 of a percentage point on the balance sheets of companies with assets exceeding $50bn.

The Obama administration expects to raise $90bn from 50 financial institutions over the first 10 years, and thinks this will ultimately cover all losses from Tarp, although at the moment these losses are being projected at $117bn.

In a statement the White House said it supported the search giant’s threat to possibly pull out of the country, saying the issue was important both from a point of view of the free flow of information and from a business perspective.

On Thursday US State Department officials repeated demands for an explanation from Beijing on the matter, summoning representatives from the Chinese embassy in Washington.

An official told reporters the US had expressed its “serious concerns” over the issue.

China meanwhile has said that foreign internet firms are welcome in the country provided they comply with Chinese laws barring access to censor certain sites deemed politically or socially unacceptable.

Beijing also said that Google’s move to scrap its filtering of search results and possibly shut down its China operation would not affect overall economic and trade ties with the US.

‘Principles’

Google announced on Tuesday that it would stop bowing to Chinese internet censors and could shut down its operations in the world’s largest online market after it uncovered a series of cyber attacks aimed at Chinese human rights activists.

The move is a major about-turn for the California-based company which began operations in China in 2006 saying it would abide by Chinese censorship rules.

“It seems to me that the principles that Google is trying to uphold are not just important in a moral or rights framework, but are also of very considerable economic importance,” Lawrence Summers, a senior White House economic adviser told reporters on Thursday.

His comments came as David Shear, the US deputy assistant secretary for East Asian and Pacific Affairs, met a Chinese diplomat in Washington to seek an explanation about the cyber attacks and censorship.

“The incident raises questions about both internet freedom and the security of the internet in China,” PJ Crowley, a State Department spokesman said.

“We have serious concerns about this and its ramifications, and we’re going to continue our dialogue with China on these and other kinds of issues.”

Crowley added: “There are… business standards and expectations, international norms that you expect your business partners to live up to.”

China meanwhile has declared its internet to be “open” but defended its censorship regulations.

“The Chinese government administers the internet according to the law and we have explicit stipulations over what information and content can be spread over the internet,” Jiag Yu, a spokeswoman for the Chinese foreign ministry, told reporters.