Goldman Sachs Partner Andrea Vella, now co-head of Asia investment banking, sent an email to former salesman Youssef Kabbaj in 2008, giving advice on how to interpret clients’ needs and deal with internal politics.
The email was cited by lawyers for the Libyan Investment Authority, which is litigating a dispute with the bank in a London court.
The LIA was set up in 2006 to invest Libya’s oil wealth internationally. The organisation claims Goldman Sachs took advantage of the low level of financial literacy of LIA staff, and suggested large and risky trades that led to heavy losses for the Libyans and large margins for the bank.
Goldman Sachs became close to the LIA after Kabbaj was embedded within the organisation in 2007.
In the message, sent after a trip to Libya, Vella tells Kabbaj that clients “often don’t know what they want or need” and it is the job of the bank to “interpret their confused words.”
Here’s the full email:
Very good job on organising the trip. You clearly have spent your time very well down there, and are in front of a very large opportunity.
I have sold billions of euros of transactions to a number of diverse clients, from the Italian insurance companies, to the government of Swaziland. The most important thing I learned on the way, is to read what the client is looking for: often they don’t know what they want or need, we need to interpret their confused words and show them the right things. Focus on that.
I hope I’ll be able to help you make this relationship of yours a memorable basis of your career. Keep it up, and don’t stress about the hungry management pulling left and right – sometimes keeping a low profile can save you from the unhealthy ‘love’ everyone suddenly wants to give you….
Let’s talk more
Under cross-examination from Philip Edey QC on Friday, a lawyer for the LIA, Vella clarified what he meant about “hungry management,” saying “a lot of different people within the firm would have been interested in utilising that access to push their own business agenda: different traders, different books, different bankers that have ideas would pull him one way or the other.”
“There was a balance between the London office, the Dubai office, who should be taking the lead in showing things to the LIA. And Youssef Kabbaj was, to some extent, being pulled by a number of different people to provide that access that he had cultivated,” Vella said.
Vella also elaborated on his remarks about dealing with clients.
Clients “may not immediately open up to what they really want, what they are looking for, and they will give bits and pieces,” said Vella. “So one needs to listen, interpret what is really coming through, and then propose the right deal, the right strategy until it suits what their initial objectives were.”
The Libyan Investment Authority is claiming it lost more than $1 billion (£750 million) on nine trades executed by Goldman Sachs in 2008 on banks such as Citigroup and UniCredit, as well as the French company EDF. The bank made more than $200 million in profit on the trades according to the LIA’s lawyers.
Goldman Sachs has said it would defend against the claims “vigorously,” calling them “without merit” when the case started.
Lawyers for Goldman Sachs, responding to the claims earlier, said that the LIA was suffering from “buyers’ remorse,” and that the bank wasn’t responsible for the losses, which happened amid the 2008 credit crunch and financial crisis.
The trial is scheduled to last until August.