Goldmans 'duped Libya out of oil cash' (2024)

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Goldman Sachs is facing extraordinary claims that it duped Libyan officials in Colonel Gaddafi’s brutal regime into investing almost £800million by plying them with girls, lavish parties and luxury trips.

The world’s most powerful investment bank is facing a bruising High Court battle with Libya’s giant sovereign wealth fund, set up in 2006 to invest the country’s oil riches after economic sanctions were lifted.

The Libyan Investment Authority claims Goldman Sachs abused the financial illiteracy and trust of Gaddafi-era officials by persuading them to invest in complex financial instruments during the financial crisis.

The investments were linked to companies whose share price crashed, including US bank Citigroup and French energy giant EDF.

They proved a disaster for the Gaddafi regime, leaving it with losses of £660million, while Goldman raked in profits of more than £200million.

The Wall Street giant has faced embarrassing accusations from one witness for the LIA, Catherine McDougall, an Australian lawyer who advised the fund at the time.

She alleged that Goldman, spearheaded by former executive Youssef Kabbaj, courted financially illiterate LIA officials by taking them to expensive clubs in London and on a ‘lavish trip to Morocco’ that included ‘heavy drinking and girls.’

In one email exchange, Mr Kabbaj – who left Goldman in 2009 – told an LIA employee to ‘divorce your wife for the weekend’. Goldman has denied any wrongdoing.

It will say that following an ‘extensive review of expenses related to LIA’, the total amount claimed by Youssef Kabbaj in 2007 and 2008 was around £50,000.

It said most lunches were either in Goldman Sachs canteens or in ‘standard business restaurants’ generally charging $100 a head.

According to the bank, Mr Kabbaj did accompany LIA officials on business trips to several countries, including a ‘handful of dinners’ during two trips.

But it added they were ‘entirely normal dinners at respectable, traditional restaurants.’

The trial, which is expected to take place next year, will also see Goldman go head to head with Sofia Wellesley, the granddaughter of the Duke of Wellington and the wife of pop star James Blunt.

Written arguments submitted by the LIA have quoted a 2007 email sent by Ms Wellesley, who previously worked for the fund, suggesting that the Libyan officials were no match for the razor sharp minds working for Goldman Sachs.

She said LIA was ‘staffed by a team of clearly naïve, unqualified individuals…doing their best in the face of extremely intelligent, ambitions and experienced individuals’

But Goldman has claimed the trades ‘were not difficult to understand’ and there is ‘no suggestion that the LIA lacked sophistication to make those investment decisions.’

Its lawyer has described the allegations about corporate hospitality as ‘tittle tattle.’

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