Judge re­jects Libya fund’s claim it was duped by Gold­man Sachs

Malta Independent - - BUSINESS & FINANCE -

Bri­tain’s High Court on Fri­day re­jected a $1 bil­lion law­suit against Gold­man Sachs by the Malta-based Libyan sovereign wealth fund, which ac­cused the in­vest­ment bank of dup­ing it into risky deals.

The Libyan In­vest­ment Author­ity (LIA) al­leged that Gold­man Sachs made hefty prof­its by tak­ing ad­van­tage of the fund’s in­ex­pe­ri­ence to per­suade it to make high-risk de­riv­a­tive trades in the period be­fore the 2008 global fi­nan­cial cri­sis. Its lawyers said Gold­man Sachs made more than $200 mil­lion in four months in 2008, while the author­ity lost an en­tire $1.2 bil­lion in­vest­ment.

The fund’s lawyer, Roger Mase­field, told a hear­ing ear­lier this year that Gold­man Sachs made “eye-wa­ter­ing prof­its” by tak­ing ad­van­tage of the author­ity’s “lack of so­phis­ti­ca­tion”. At­tor­neys also claimed that Gold­man Sachs wooed the fund’s man­agers with lav­ish cor­po­rate hos­pi­tal­ity and for­eign trips – and even pros­ti­tutes.

Gold­man Sachs de­nied any wrong­do­ing.

High Court Judge Dame Vivien Rose said she dis­missed the claim that the dis­puted trades were the re­sult of “un­due influence” by Gold­man Sachs. She said that al­though the author­ity may have made un­suit­able in­vest­ments, it was no dif­fer­ent “from many other in­vest­ments that the LIA made over the period in that re­gard.” Gold­man Sachs said it was pleased with the rul­ing, which it called “a com­pre­hen­sive judg­ment in our favour.”

The LIA said it would con­tinue to fight be­cause “Libya’s wealth must be re­turned to the peo­ple of Libya.” The €61 bil­lion fund was set up by the late Libyan leader Moam­mar Gaddafi in 2006 to in­vest the coun­try’s oil wealth. He was de­posed in 2011.

In a state­ment, the LIA ex­plained: “The Lon­don High Court has today ruled that the Libyan In­vest­ment Author­ity (LIA) has lost its case against Gold­man Sachs. The ac­tion was brought in early 2014 by ear­lier lead­er­ship of the LIA and al­leged that Gold­man Sachs had wrong­fully ex­ploited the LIA in trades in 2007 and 2008.”

Com­ment­ing on the de­ci­sion, the Pres­i­dent of the In­terim Steer­ing Com­mit­tee of the LIA, Dr Ali Mah­moud Has­san, said: “The Libyan In­vest­ment Author­ity un­der­took a strat­egy to se­cure its as­sets and grow their mar­ket value. The lead­er­ship of the LIA has al­ways been clear that it would do all it could to pur­sue those who ex­ploited the fund in the late 2000s. As a first step, the LIA em­barked at the end of 2013 on pur­su­ing court cases against Gold­man Sachs and So­ciété Générale.

“Today’s rul­ing will not break our re­solve and we re­main fo­cused on the other lit­i­ga­tions raised by the pre­vi­ous Board of Di­rec­tors to put right the wrongs suf­fered else­where in the past. Libya’s wealth must be re­turned to the peo­ple of Libya.”

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