Goldman banker ‘who hired prostitutes f led Libya fearing for life’
A GOLDMAN Sachs banker who procured two prostitutes to win an investment deal had to flee Libya after a Gaddafi crony discovered he had ‘screwed’ a £46billion wealth fund, a court heard yesterday.
Youssef Kabbaj was ‘afraid for his life’ and said a foreign intelligence agency had been called to extract him from Tripoli after the extent of the Gaddafi-backed Libyan Investment Authority’s (LIA) financial losses was discovered.
The fund’s deputy director Mustafa Zarti – a friend of Colonel Gaddafi’s ruthless son Saif alIslam – went ‘berserk’ during a meeting with the Goldman Sachs executive, the High Court in London was told.
Mr Kabbaj had wooed Mr Zarti to win approval for the deals and took his younger brother Haitem on an all- expenses-paid trip to Dubai, where they stayed at the five-star Ritz Carlton with two prostitutes, it is alleged.
He was said to have lavished corporate hospitality on inexperienced fund managers who were ‘financially illiterate’ but were too embarrassed to admit they did not understand complex deals, and were terrified of failing the Gaddafi regime.
The LIA was set up in 2006 by Saif al-Islam after the West lifted economic sanctions and was meant to invest Libya’s oil riches to create a stable income for the country.
Fund managers were under pressure to invest $10billion within the first few months and were ‘bombarded’ with sales pitches from investment banks desperate to win their lucrative business. However, Mr Zarti favoured a long-term relationship with Goldman Sachs, the world’s most powerful investment bank, which gave his younger brother Haitem a prestigious internship in London.
Investment manager Abdulfattah Enaami said Mr Zarti was volatile and short-tempered but Mr Kabbaj could ‘stroke his ego’ and win his trust.
He said deals which Mr Kabbaj recommended were signed off without being properly understood, and said one investment – a 100million euro stake in French energy firm EDF – ‘ was probably selected because it was a round number’.
Giving evidence at the hearing, Mr Enaami said he and his colleagues had been ‘easy prey’ for Mr Kabbaj.
He said: ‘ We were all scared of failure but we were not fully equipped to be dealing with these types of investments. Youssef knew this and exploited it.’
Mr Enaami described a ‘ highly charged’ meeting in Tripoli in 2008 when Mr Zarti confronted Mr Kabbaj over losses of almost £850million.
He said: ‘I recall Mr Zarti being very angry and verbally abusing Goldman Sachs. He really went berserk... Youssef was very afraid for his life.
‘He even cut our dinner short, saying that a foreign intelligence agency had been called to extract him.’
Mr Kabbaj no longer works for Goldman and has reportedly received a £3.1million payout from the bank. He is not due to be called as a witness.
Lawyers for the LIA claim he wooed ‘naive and vulnerable’ officials to persuade them to invest, and that Goldman made ‘eyewatering’ profits of more than £200million, even after the deals went wrong for the LIA.
Internal emails showed senior executives at Goldman referred to ‘brainwashing’ officials in Libya, and one partner warned they were ‘ very unsophisticated’, adding: ‘ Anyone could “rape” them.’
The Libyan fund is now suing Goldman in an attempt to force it to repay £846million to cover its losses.
Goldman said the LIA money was lost because of stock market falls during the 2008 financial crisis.
It contends the fund’s officials understood the risks involved but are now trying to use the courts to recoup their lost investments.
The case continues.
‘He really went berserk’