AGL 40.00 Decreased By ▼ -0.01 (-0.02%)
AIRLINK 127.04 Decreased By ▼ -0.95 (-0.74%)
BOP 6.67 Increased By ▲ 0.07 (1.06%)
CNERGY 4.51 Decreased By ▼ -0.09 (-1.96%)
DCL 8.55 Increased By ▲ 0.07 (0.83%)
DFML 41.44 Decreased By ▼ -0.04 (-0.1%)
DGKC 86.85 Increased By ▲ 0.27 (0.31%)
FCCL 32.28 Increased By ▲ 0.14 (0.44%)
FFBL 64.80 Decreased By ▼ -0.62 (-0.95%)
FFL 10.25 No Change ▼ 0.00 (0%)
HUBC 109.57 Decreased By ▼ -0.92 (-0.83%)
HUMNL 14.68 Decreased By ▼ -0.07 (-0.47%)
KEL 5.05 Decreased By ▼ -0.08 (-1.56%)
KOSM 7.46 Increased By ▲ 0.34 (4.78%)
MLCF 41.38 Decreased By ▼ -0.27 (-0.65%)
NBP 60.41 Increased By ▲ 0.32 (0.53%)
OGDC 190.10 Decreased By ▼ -4.59 (-2.36%)
PAEL 27.83 Decreased By ▼ -0.12 (-0.43%)
PIBTL 7.83 Decreased By ▼ -0.17 (-2.13%)
PPL 150.06 Decreased By ▼ -1.11 (-0.73%)
PRL 26.88 No Change ▼ 0.00 (0%)
PTC 16.07 Increased By ▲ 0.07 (0.44%)
SEARL 86.00 Increased By ▲ 7.80 (9.97%)
TELE 7.71 Increased By ▲ 0.32 (4.33%)
TOMCL 35.41 Decreased By ▼ -0.26 (-0.73%)
TPLP 8.12 Increased By ▲ 0.21 (2.65%)
TREET 16.41 Increased By ▲ 0.52 (3.27%)
TRG 53.29 Increased By ▲ 0.53 (1%)
UNITY 26.16 Decreased By ▼ -0.39 (-1.47%)
WTL 1.26 Decreased By ▼ -0.01 (-0.79%)
BR100 9,884 Decreased By -36.4 (-0.37%)
BR30 30,600 Decreased By -151.5 (-0.49%)
KSE100 93,355 Increased By 130.9 (0.14%)
KSE30 28,931 Increased By 46 (0.16%)

Goldman Sachs exploited inexperienced staff at Libya's sovereign wealth fund to clinch "inappropriate" deals which cost the fund $1.2 billion (1.5 billion euros), lawyers claimed at London's High Court Monday. The high-profile trial promises a rare glimpse into the workings of the US investment bank and features allegations of the use of prostitutes and of shady dealings in 2008.
The Wall Street giant denies any wrongdoing, saying the Libyan Investment Authority (LIA) lost money due to the 2008 financial crash, not their close but controversial working relationship. On the opening day of the hearing into LIA's claim, its lawyer Roger Masefield read out an internal message sent by Goldman Sachs partner Driss Ben-Brahim.
Ben-Brahim said the nascent fund, set up by Moamer Kadhafi's regime in 2006 to capitalise on Libya's oil wealth, was "very unsophisticated - and anyone could 'rape them'," the court heard. The LIA alleges that Goldman Sachs employee Youssef Kabbaj embedded himself in the fund, gained the trust of "young and impressionable staff" and sold it complex products that ended up losing the LIA over $1.2 billion.
These actions earned the bank over $220 million in profits, LIA lawyers claim. Kabbaj built an especially close relationship with Haitem Zarti, younger brother of fund chairman Mustafa Zarti, securing him a coveted Goldman internship, Masefield told Judge Vivien Rose. Kabbaj took Haitem Zarti on holidays to Morocco and to a conference in Dubai.
Here, "it appears from Goldman Sachs' disclosure that, while there, Mr Kabbaj arranged for two prostitutes to spend the evening with them at a cost of $600," LIA lawyers claimed. It is then alleged that the bank rushed through a basket of deals of "staggering size" in 2008 without the LIA conducting due diligence tests or seeking independent advice.
The bank had earlier sold the LIA complex derivative products tied to the share prices of Citigroup bank and French energy firm EDF. The LIA, one of the world's wealthiest investors, claims it was tricked into believing it had gained strategic stakes in the companies. But it says in reality it only held risky bets which became worthless when stock markets plunged following the collapse of Lehman Brothers bank in September 2008, wiping out the $1.2 billion outlay.
The situation became clear to Mustafa Zarti during a 2008 meeting with the bank, whereupon he threw Kabbaj out of the meeting, the court heard. He later called Goldman Sachs a "bank of Mafiosi" and claimed it had "abused his trust", selling him risky products inappropriate for a state fund. The claimant's legal team cited as evidence of their opinion of their financial knowledge an email sent by a Goldman Sachs vice-president criticising a presentation given to the LIA.
It said: "You just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels." Goldman Sachs denies it exerted undue influence on the fund or abused its trust, arguing that the deals involved standard products common in the financial world.
In its submission to the court, it said: "The credit crisis and its impact on global markets turned out to be far more prolonged than the LIA and the great majority of market participants had anticipated. "The LIA was the victim of an unforeseen financial depression, not of any wrongdoing." Goldman partners including Andrea Vella, co-head of investment banking in Asia, are expected to give evidence in the eight week hearing, in which the LIA is seeking to recoup its losses.

Copyright Agence France-Presse, 2016

Comments

Comments are closed.