NewsNorth AfricaLibya sues Goldman Sachs for $1.2bn in damages


Posted on Tuesday, 14 June 2016 16:58

Libya sues Goldman Sachs for $1.2bn in damages

By Mark Anderson

Photo©Richard Drew/AP/SIPALibya's government-managed sovereign wealth fund has started legal proceedings against Goldman Sachs, accusing the bank of pressuring executives to make high-risk trades that resulted in a $1.2bn loss.

In a case being heard at London's high court, Goldman employees are accused of hiring prostitutes, renting out five-star hotel rooms and holding business meetings on plush yachts in an attempt to score lucrative contracts from the Libyan Investment Authority (LIA), a $60bn fund set up in 2006 during Muammar Gaddafi's rule over the country.

It is important you stay super close to clients on a daily basis

Lawyers for the LIA are claiming compensation for losses on nine trades that Goldman Sachs executed between January and April 2008. They claim that the trades gave Goldman a profit of $368m.

Goldman's lawyers said: "The LIA was the victim of an unforeseen financial depression, not of any wrongdoing by Goldman Sachs."

But senior staff at the bank called the LIA's employees "very unsophisticated" and described one of their executives as "someone who lives in the middle of the desert with his camels," according to e-mails released for the trial.

In one example cited in the hearing, Goldman banker Youssef Kabbaj arranged a training programme for Libyan investors in London, spending $31,000 on entertainment and hotels for the visitors. According to evidence from the case, Kabbaj was told by his bosses to "stay a lot in Tripoli. It is important you stay super close to clients on a daily basis. Teach them, train them, dine them."

Goldman dismissed the LIA's claims as "unremarkable features of relationships between commercial counterparties," according to court documents.

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