Since the 2008 global financial crisis, Wall Street investment banks have taken some reputational body blows. Perhaps no firm has been the target of so much hate and vitriol as Goldman Sachs, who have been the subject of comparisons to vampire squids and excruciating tape recordings of its traders boasting about ‘ripping clients’ faces off’. Though it’s doubtful that any client is more upset with its Goldman experience than the Libyan Investment Authority (LIA), that country’s US$ 66bn sovereign wealth fund. The fund has complained that it lost over 99% of its principal, approximately US$ 1bn, on a high-risk derivatives trade in early 2008.
The lawsuit provides an unusually entertaining read, complete with allegations that a Goldman account manager plied his clients with gifts of aftershave and chocolate, and liquor-soaked trips to Morocco for which he advised an LIA employee to “divorce your wife for the weekend”. For its part, the bank has countered that the LIA’s managers were ‘financially sophisticated’ and dismissed the lawsuit as ‘buyer’s remorse’. At one point, an LIA executive became so agitated that he cursed at two Goldman bankers during a meeting in Tripoli and told them to “get out of my country”, and that he “could come after their families.” Now the lawsuit is at risk of dismissal in London — not because it is without merit, but because Libya now has two competing governments claiming legitimacy and control over the LIA’s assets.