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VENTURES AFRICA – Libya’s sovereign wealth fund is suing American multinational investment bank, Goldman Sachs for what it considers deliberate exploitation of Advisory position, following a failed $1 billion investment in various international companies’ stock options.
The government-managed fund – which operates as Libyan Investment Authority (LIA) and was launched in 2006 to invest funds from excess crude sales – has accused Goldman of gaining the trust of inexperienced local managers before convincing them to take on nine investment deals in “derivative trades” in companies such as ENI, Santander, EdF and Citigroup.
LIA subsequently lost the entire value of its investment upon expiry in 2011, following the 2008 financial global financial crisis. It however claims the investment bank still made a substantial profit of $350 million from the deals.
According to a statement handed to London’s High Court, where the suit was filed last week, Goldman took advantage of the LIA’s lack of expertise and encouraged the fund to enter into the disputed trades in return for substantial profit margins.
A spokesperson from Goldman however dismissed the allegation, saying it was “without merits”.
Libya’s Sovereign wealth fund is reportedly valued at $65 billion, with oil and gas investments including Oilinvest Group, a European-based downstream oil group, Libyan Arab Foreign Investment Company (LAICO) and Libyan African Investment Portfolio (LAP) all listed under its asset portfolio.