First Goldman Sachs, now SocGen in Libya’s sights
Société Générale is next on the Libyan Investment Authority’s (LIA) legal hitlist, The Independent has learnt.
On Thursday it emerged that the LIA was suing Goldman Sachs for $1bn (£608m) in losses made on a series of trades in derivatives linked to shares plus $350m in profits made on fees and interest.
The LIA is, however, planning multiple legal assaults on banks which dealt with the sovereign fund when it was run by placemen of the country’s since overthrown dictator, Colonel Muammar Gaddafi, with the French bank next in line.
In its legal claim the LIA alleged that Goldman funded luxury trips to Morocco and plied staff members with gifts of chocolate and aftershave as it sought to cultivate a close relationship with the $60bn fund, set up to invest the country’s vast oil wealth.
Western banks had flooded into the North African nation during the middle years of the last decade, prompted by a thaw in international relations and encouraged by Western governments keen to bring Libya in from the cold.
In 2011 the Financial Times reported that Société Générale had structured a $1bn bet on its own shares for the LIA, which went bad after they fell sharply leaving the Libyans facing a massive loss.
The bet was placed not long after the bank had racked up losses of €4.9bn (£4bn) as a result of the actives of the “rogue” trader Jérôme Kervial in 2008 when it was felt that the shares were undervalued.
As the effects of the financial crisis continued to shake the world’s markets the shares failed to recover as the gamble had anticipated.
Société Générale has previously argued that it was working with the fund in a transactional capacity rather than as an adviser. It declined to comment last night.
Goldman Sachs is expected to make similar arguments in its defence. On Thursday, the US bank said it would defend the claim vigorously and believed it was “without merit”.
The Financial Conduct Authority is understood to be maintaining a watching brief, and will closely follow any Goldman trial before deciding whether to take the matter further, if it gets that far.
Regulated firms are under a responsibility to keep the watchdog informed of any incidents which may be of interest to it, so it will expect any banks involved in the situation to keep it regularly updated.
A spokesman declined to comment las night.
The LIA was run by Moha–med Husain Layas, a commercial banker hired at the suggestion of the late Gaddafi. His deputy, Mustafa Zarti, owed his position to a friendship with Gaddafi’s son, Saif al Islam.
Mr Zarit’s brother, Haitem, was allegedly handed an internship in London and Dubai as the relationship between Goldman and the LIA deepened.
- 1 Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
- 2 Expert urges cat lovers to own just one animal each
- 3 Sainsbury's '50p challenge' poster telling staff to encourage customers to spend more placed in shop window instead of staff room
- 4 Yes, the iPhone 6 is a miracle, but it's Apple's tax affairs that deserve a double take
- 5 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
Sainsbury's '50p challenge' poster telling staff to encourage customers to spend more placed in shop window instead of staff room
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
Isis an hour away from Baghdad - with no sign of Iraq army being able to make a successful counter-attack
British man raped while urinating in bushes at Oktoberfest beer festival in Germany
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...