Libyan sovereign wealth fund battles Goldman Sachs in court

Libya's $67 billion (€60 billion) sovereign wealth fund will go head-to-head with Goldman Sachs in London's High Court this week over claims that the US investment bank exploited the fund by encouraging it to make risky and ultimately worthless investments.

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. Neither of the brothers could be reached for comment.

Denies allegations

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. The case is expected to shine a light on the way some of the world’s biggest investment banks conducted business with Col Muammar Gadafy’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 to invest the large reserves accumulated from its oil revenues and integrating its economy into the international financial system after years of sanctions. – (Reuters)