Libyan Investment Authority Sues Goldman Sachs in London

Jan 22, 2014 11:36 am ET

(Updates with SEC probe in fifth paragraph.)

Jan. 22 (Bloomberg) -- The Libyan Investment Authority, the north African nation’s sovereign wealth fund, sued Goldman Sachs Group Inc. in the U.K. over investments worth more than $1 billion.

“Goldman Sachs abused the relationship of trust and confidence with the then newly-formed LIA, being the sovereign wealth fund of the Libyan people,” a spokesman for the fund, who declined to give his name in line with company policy, said in an e-mailed statement today. The fund suffered “significant losses.”

Libya’s sovereign wealth fund built up assets of about $60 billion under Muammar Qaddafi, who was deposed and killed in a 2011 coup. The LIA lost about $1.75 billion betting on structured products in 2007 and 2008, about $900 million of which was with Goldman Sachs, its former chairman said in June 2012.

The details of the lawsuit, filed Jan. 21 at London’s High Court, aren’t yet public. Fiona Laffan, a spokeswoman for Goldman Sachs, declined to comment.

The U.S. Securities and Exchange Commission is probing Goldman Sachs’s dealings with the LIA for possible violations of American anti-corruption laws. The fund has said it is cooperating with the authority.

Fund Size

Libya has the second-largest sovereign wealth fund in Africa with about $65 billion, according to the Sovereign Wealth Fund Institute, and the 20th largest in the world.

Mohsen Derregia, the fund’s former chairman, said in March of last year it had demanded an explanation from Societe Generale SA on how derivative contracts lost about $1 billion.

“Losses between 15 and 16 percent are considered acceptable, but our shares devalued by up to 80 percent,” he said in an interview. “We want to know what happened.”

The case is: The Libyan Investment Authority v. Goldman Sachs International, case no. 14-310, High Court of Justice, Chancery Division.

--Editors: Lindsay Fortado, Anthony Aarons