Goldman Sachs dealmakers lavished Libyan officials with prostitutes to win contract, London High Court hears

Goldman Sachs paid for prostitutes and lavish parties in an attempt to win business from the Libyan Investment Authority

Jim Armitage
Monday 13 June 2016 14:31
comments
Goldman denies wrongdoing and says the LIA was treated as an arms-length customer
Goldman denies wrongdoing and says the LIA was treated as an arms-length customer

A former Goldman Sachs dealmaker trying to persuade Gadaffi-era Libya to invest $1 billion with the investment bank procured prostitutes and invited Libyan officials to lavish parties in the hope of winning the business, the High Court heard today.

The Libyan Investment Authority sovereign wealth fund is suing Goldman Sachs for inappropriately coercing its naïve staff into giving its sovereign wealth fund cash to the bank to invest in products they did not understand. The products were designed to generate big profits for Goldman, the LIA claims.

The LIA invested $1.2billion in complicated trades with Goldman which rapidly proved worthless as the financial crisis bit.

Goldman, the LIA claims, made a gross profit on the trades of $367.7 million

In its opening argument to the court, the LIA today cited how Goldman gave a highly coveted internship to the brother of key LIA director, Mustafa Zarti. The Goldman banker in charge of the LIA contract – Youssef Kabbaj – also treated the brother to extensive training, holidays in Morocco and, on one occasion, business class flights and five-star accommodation in Dubai, where he also arranged for two prostitutes for the evening at a cost of $600.

These treats were three months before the internship was offered with a salary of $5,000-$7,000 a month – equivalent to the pay of a “gs entry level analyst”, as Kabbaj described it.

Meanwhile, the LIA offered evidence Goldman bankers were clearly aware of how naïve the Libyans were, describing in emails how the country’s banking system was “Jurassic”. Goldman banker Driss Ben-Brahim wrote: “They are very unsophisticated – and anyone could 'rape' them.”

A Goldman vice president emailed to a colleague: “You just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels.”

Asked how literate the Libyans were in derivatives, Kabbaj responded in one email “Baaaaaaaasic.”

Goldman denies wrongdoing and says the LIA was treated as an arms-length customer.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments