JPMorgan faces $6M bribe allegation

The Libyan Investment Authority sued JPMorgan Chase & Co. in London, saying the lender paid more than $6 million in bribes to secure a $200-million bond deal.

JPMorgan’s Bear Stearns sent the payments to businessman Walid Al- Giahmi — a close friend of the Qaddafi regime — to arrange deals in a contract that was no more than a “sham” agreement, according to London court documents. The bank has until next month to submit defence documents in the case, which was filed in April. A spokesman declined to comment.

The LIA, an oil wealth fund set up under former dictator Moammar Qaddafi, is pursuing claims against major banks seeking to nullify unprofitable deals that may have been influenced by bribes. Societe Generale SA paid more than $1.7 billion in settlements and regulators’ fines over claims the bank paid a bribe to Giahmi to arrange deals.

The Libyans say Giahmi may have acted “in the same way” on five sets of transactions involving other lenders, according to filings. Giahmi had connections with the Qaddafi family and regime, including Qaddafi’s son Saif Al Islam.

Bear Stearns raised $200 million for the LIA in five-year notes after the services agreement with Giahmi was signed in July 2007. Neither Giahmi nor his firm “provided any legitimate services to Bear Stearns,” according to the LIA’s complaint.