The London-based bankers who allegedly cajoled Gadaffi-era Libyan officials into giving them billions of dollars to invest are now being investigated by the US criminal authorities.
Last week, a civil action launched here by the Libyan Investment Authority (LIA) claimed Goldman Sachs bankers lavished all-expenses-paid trips to Morocco and gifts on Libyan officials, as well as an internship in London for one of their relatives.
The LIA’s $1bn (£613.62m) investment vanished when the complex bets went sour.
The Independent subsequently revealed that the LIA was planning to sue Société Générale as well. Both banks deny wrongdoing.
Yesterday it emerged that the US Justice Department has joined the chase, investigating banks, private-equity firms and hedge funds that may have broken anti-bribery laws.
The federal investigators are, the Wall Street Journal reported, looking into Goldman, Credit Suisse, JPMorgan Chase, Société Générale, private-equity firm Blackstone and hedge-fund manager Och-Ziff Capital Management.
It must be stated that the fact of an investigation should not be taken as a sign of wrongdoing.
Among the deals being scrutinised was a $120m Tripoli hotel project involving InterContinental Hotels Group in which Och-Ziff had a stake. Construction was halted when the Libyan civil war broke out and the project has still not been completed.
The US investigators are particularly focusing on deals made at around the time of the financial crisis which came at the peak of the rush of Western firms –encouraged by their governments – into Libya. Specifically, they are looking for breaches of the Foreign Corrupt Practices Act, which bans US companies from paying bribes to foreign officials. Under US definitions, LIA staff count as officials.
The LIA lawsuit last week highlighted how top brass at the sovereign wealth fund were placed by Gadaffi’s son, Saif.
The Wall Street Journal said the criminal probe is focusing on the roles played by middlemen known as fixers operating in London and the Middle East who served as gatekeepers to Libya for Western businesses.
The investigation is probing how these fixers were paid for arranging deals between financial firms and Libyan officials. Like some of the LIA executives, these fixers would often have connections to the Gadaffis, one source close to the investigation said.
According to KPMG, the LIA invested chunks of up to $1bn in funds run by investment firms named by the newspaper, with the exception of Blackstone.