By Hadi Fornaji
Tripoli, 20 August 2014:
The US investment bank Goldman Sachs has given up trying to have the Libyan Investment Authority’s . . .[restrict]$1.2 billion lawsuit thrown out by a London court. The case is therefore due to start in October.
The LIA launched the civil action in the High Court in the UK this January. It claimed that in 2008 Goldman Sachs had put $1.2 billion of LIA funds into a complex leveraged speculation that the shares of six companies would increase in the next three years. The transaction, for which the US bank took some $350 million in fees, bombed when the international financial markets collapsed in the wake of the US subprime crisis.
The investments, based on the share prices of insurance giant Allianz, Banco Santander, Citigroup, Électricité de France, Italy’s UniCredit bank and oil company ENI, all became worthless.
This April Goldman Sachs asked the High Court to throw out the action on the grounds that it had no reasonable chance of success. The bank has now withdrawn this application which the LIA said yesterday was in any event “misconceived and issued purely for tactical reasons, including a desire to delay the determination of the LIA’s claims”.
The US bank has emailed a statement saying: “We continue to believe this case is entirely without merit and intend to contest it vigorously as it moves through the legal process”.
The LIA said yesterday: “application was misconceived and issued purely for tactical reasons, including a desire to delay the determination of the LIA’s claims”.
At the time that it launched its action, the Authority said that from its engagement in 2007, Goldman Sachs had deliberately exploited a relationship of trust and confidence. It had preyed the LIA’s extremely limited financial and legal experience. Goldman employees had had unfettered access to the LIA’s offices, systems and information and had provided extensive hospitality to the Authority’s employees. They had taken advantage of this unique position.
The LIA also claimed, when it launched the London action, that the deals involved “were inadequately documented by Goldman Sachs, with the details of the actual trades undertaken being provided to the LIA weeks (and in some cases months) after the trades were executed. When the LIA received these and began to understand the true nature of the disputed trades it became clear that the trust and confidence placed in Goldman Sachs had been abused.”
The LIA has also launched a claim in London for $1.5 billion against French bank Societe Generale claiming that it paid $58 million to a Qaddafi family friend in order to secure LIA investments.