Goldman Sachs employees courted clients at Libya’s national investment fund with prostitutes and luxury travel, a London court heard.
The Libyan Investment Authority is claiming for $1.2 billion (£850 million) it lost on nine trades executed by Goldman Sachs in 2008, on banks such as Citigroup and Unicredit, as well as French company EDF.
The bank made more than $200 million in profit on the trades, according to the LIA’s lawyers.
The bank said that “the LIA was the victim of an unforeseen financial depression, not of any wrongdoing,” according to a report in the Guardian. Goldman’s lawyers will address the court on Tuesday and released this statement to the Daily Mail in advance: “The claims are without merit and we will continue to defend them vigorously.”
The fund was set up in 2006 to invest Libya’s oil wealth internationally. The LIA claimed 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 them and profits for the bank.
Driss Ben-Brahim, a former Goldman banker, said in an email at the time: “They are very unsophisticated — and anyone could ‘rape’ them,” according to a report in the Financial Times.
Goldman Sachs became close to the LIA after Youssef Kabbaj, a former Goldman Sachs sales employee, was embedded within the organisation in 2007.
Kabbaj spent £22,000 on hotels and entertaining for LIA employees on one training trip, according to written arguments seen by the Financial Times, with the bank urging him to “stay a lot in Libya. Teach them, train them, dine them,” according to the FT.
The trial is scheduled to last for seven weeks.