When the Libyan Investment Authority started out in 2007, it had about $60 billion, office space in Tripoli and a lot to learn. Goldman Sachs, keen to do business with the sovereign wealth fund, offered to help.
Bloomberg News reports that Goldman Sachs bankers gave LIA staff training at its London office and spent time in Tripoli showing them how to monitor markets. The bank characterized it as a 'special trusting type of relationship,' the LIA said in documents in a London lawsuit.
The relationship soured after the fund lost about $1 billion following the 2008 financial crisis. Lawyers for the fund, appearing for the first time at a London court hearing, say Goldman Sachs abused its role to secure money-losing investment deals.
The lawsuit against the bank, which could go to trial as soon as next year, may hinge on how close Goldman Sachs bankers got to the fund, set up by former Libyan leader Muammar Qaddafi to manage the country’s oil wealth, and whether that relationship gave the New York-based bank undue influence over the LIA. U.S. agencies are also investigating banks’ dealings with sovereign wealth funds.
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