Following our recent report of the case taken by the Libyan Investment Authority (LIA) against Goldman Sachs, the LIA has issued the following statement detailing its case against the bank:
The full extent of the Libyan Investment Authority’s (LIA) case against Goldman Sachs was detailed today, with the serving of the legal claim and its particulars on Goldman Sachs. This follows the submission by the LIA at the High Court in London last week.
The claim rests on disputed equity derivatives trades, amounting to in excess of $1 billion. These trades expired as worthless in 2011 despite delivering immediate and disproportionate profits to Goldman Sachs, estimated to be in the range of $350 million.
The central charge is that Goldman Sachs deliberately exploited the relationship of trust and confidence it had established with the LIA to cause the LIA to enter into each of the disputed trades.
The legal papers submitted by the LIA note the huge imbalance between Goldman’s sophisticated financial expertise and the LIA’s extremely limited in-house financial and legal experience; the LIA being a newly formed sovereign wealth fund that became operational during the last years of Gaddafi-era Libya.
From late 2007 onwards until after the disputed trades took place, Goldman Sachs employees were extensively involved in self-described training and development of the team at the LIA, had unfettered access to its offices, systems and information, and provided extensive corporate hospitality for LIA employees.