Euromoney, October 2016
In the end, staff at the Libyan Investment Authority (LIA) just weren’t stupid enough.
That’s the central conclusion in the sovereign fund’s expensive loss of a $1.2 billion legal battle with Goldman Sachs in London’s High Court in October.
The case had alleged that Goldman had taken advantage of the lack of sophistication at the fledgling Libyan fund and sold it products whose risk profile the buyer did not understand, resulting in the total loss of $1.2 billion of capital while simultaneously earning the US bank an alleged $200 million. The problem with this premise was that it required the LIA to prove that its staff in those early days were hopeless ingénues in wide-eyed thrall to the wisdom and abuse of Goldman bankers, and unable to understand what they were buying.
As Euromoney has reported before, this was profoundly irritating to some of the staff who were there at the time, many of them alumni of leading western institutions, and in the end it was a bridge too far.
“The contemporaneous documents lead me to conclude they [the LIA] have exaggerated their lack of sophistication,” said Judge Vivien Rose. “I find that the LIA has greatly exaggerated the extent to which senior and junior personnel were naïve and unworldly about the nature of the dynamics of their relationship with Goldman Sachs.”