|
In
what will be one of the most closely watched cases in the City
of London, the Libyan Investment Authority (LIA) is attempting
to claw back $1.2 billion from the Wall Street giant from nine
disputed trades carried out in 2008.
The LIA's claim hinges in part on its allegations that the
trades were procured under "undue influence". It specifically
cites an internship that Goldman Sachs provided for Haitem Zarti,
the brother of Mustafa Zarti, the LIA's former deputy chief.
Neither Zarti is connected with the fund now. Reuters could not
reach either of the brothers for comment.
Goldman Sachs, which denies all the allegations, maintains that
its relationship with the LIA was at all "material times an
arm's length one" between banker and client, and that the trades
in question "were not difficult to understand".
"The claims are without merit and we will continue to defend
them vigorously," the bank said in an emailed statement on
Friday.
The case is expected to shine a light on the way some of the
world's biggest investment banks conducted business with Colonel
Muammar Gaddafi's regime, doing deals that generated large fees,
but which the Libyans say did little to benefit the oil-rich
state's sovereign wealth fund.
Libya set up the LIA in 2006 with the aims of investing the
large reserves accumulated from its oil revenues and integrating
its economy into the international financial system after years
of sanctions.
An internal quarterly LIA management report obtained by the
anti-corruption campaign group Global Witness in 2011 suggested
the fund had suffered heavy losses. One of the biggest was a
98.5 per cent fall in the value of the fund's $1.2 billion
equity and currency derivatives portfolio.
The LIA is also pursuing the French investment bank Societe
Generale for some $2.1 billion in relation to another set of
trades entered into between 2007 and 2009. SocGen is contesting
the case, which is only expected to come to trial in January
2017.
The business advisory firm BDO has been appointed by the court
to manage the litigations on the LIA's behalf, as two rival
chairmen are still laying claim to control of the LIA.
It was hoped this issue would be resolved with the formation of
a U.N.-backed unity government for Libya, but this is still
struggling to establish itself.
The Goldman Sachs case is scheduled to run for seven weeks.
(Reporting by Claire Milhench; Editing by Hugh Lawson)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
