Alternative Review of the Year. Pyrrhic Victory of the Year: Goldman Sachs vs Libyan Investment Authority

Year in Data 2016: China’s Dominance of Investment Banking Fees Reaches Troubling Levels
16 December, 2016
Alternative Review of the Year. Investigative Journalists of the Year: US Department of Justice on 1MDB
20 December, 2016
Show all

Euromoney, December 2016

Bravo, Goldman Sachs, for emerging victorious from the Libyan Investment Authority’s more than $1 billion claim against it in London’s High Court. The ruling saved the bank a ton of money.  It did not really save its reputation, though.

There are some things Goldman did not contest about the ruling. One, that it lost its client $1.2 billion in no less than nine financial derivative trades Goldman put the Libyans into between January and April 2008; and two, that Goldman made hundreds of millions of dollars in profit from doing so. (In the original skeleton arguments before the trial, the LIA said Goldman made $350 million and Goldman in turn said that “any profits in fact made by GSI [Goldman Sachs International] as a result of the Disputed Trades are irrelevant to the LIA’s pleaded claims.”)

Along the way the High Court was regaled with tales about banking misbehaviour and derring-do in North Africa; from allegations that Goldman bankers not only whisked junior LIA staffers to Morocco but procured prostitutes for them, to LIA chief Mustafa Zarti telling Goldman banker Youssef Kabbaj to “Fuck your mother, fuck you, and get out of my country.”

Winning the case was always going to be a big ask for the Libyans, one that required them to demonstrate a level of institutional incompetence such that they could not understand what Goldman was selling them. The people at the LIA in the early days were not that stupid, the court realized it, and the case was lost. But Goldman, victorious or not, emerged ridiculed.

Full article:

Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

Leave a Reply

Your email address will not be published. Required fields are marked *