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Libyan Investment Authority Sues Goldman Sachs for Unethical Persuasion

(Author: Libyan Gazette Editorial Staff)


Early this week the Libyan Investment Authority (LIA) filed a lawsuit against Goldman Sachs claiming that the multinational banking firm used unethical bribes to persuade the LIA to put their money in investments that the LIA was not originally convinced by. Along with gifts and extravagant trips flying on business class and staying at five star hotels, Goldman gave an internship to the LIA’s deputy executive, Mustafa Zarti’s, younger brother, Haitem Zarti.

In 2006, former Libyan dictator Muammar Gaddafi established a sovereign fund, the Libyan Investment Authority (LIA), to invest the profits made from oil. Gaddafi’s decision to establish the fund came after sanctions that Libya was put under for years had finally been lifted.

With little to no knowledge in investment banking Libya turned to the New York based investment bank, Goldman Sachs for guidance in 2007 on how to invest funds adding up to over $35 billion.

In 2008, Goldman engaged the LIA in a deceitful manner taking unethical measures to convince the LIA to invest in certain companies.

By 2014, the LIA filed the lawsuit against Goldman for $1.2 billion alleging that bank abused the trust given to them and manipulated the LIA into deals that cost the LIA $1.2 billion in losses as a result of the economic downturn in 2008. Goldman is being accused of costing the LIA a heavy loss with the intent of benefiting from the Libyan fund by taking advantage of the LIA’s lack of expertise in investment banking.

Youseff Kabbaj is the Goldman banker that executed the delivery of these bribes. He has allegedly been involved in ghost writing for some members of the LIA letters to convince the fund’s board to invest in certain portfolios that he would then make presentations to the board about.

Goldman is now saying that the LIA’s accusations are faulty because, according to them, the LIA had the expertise necessary to understand the risks of the investments it was making.

The LIA has shared with the court statements taken from emails between Goldman staff mentioning the LIA’s “zero-level sophistication” and mocking the LIA saying “you just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels.”

Court sessions for this lawsuit are taking place in London’s High Court and the expected duration of this court case is estimated to be seven weeks.

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