Thread: Goldman Sachs Lost 98% Of Libya's $1.3B Sovereign Fund

MAY 31, 2011 @ 02:33 PM 31,605 VIEWS


Goldman Sachs Lost 98% of Libya's $1.3B Sovereign Wealth Fund Investment

May. 31 2011 - 2:33 pm
By AGUSTINO FONTEVECCHIA


Gadhafi, rocking it with Hosni Mubarak and Yemen's Ali Abdullah Saleh - AFP/Getty Images via @daylife

As civil war roars on in Libya and Colonel Muammar Gadhafi vows to remain in power, reports surfaced that the Northern African country entrusted $1.3 billion through its sovereign wealth fund to Goldman Sachs in 2007, of which the investment bank lost approximately 98%, sparking the ire of Libyan officials. The fascinating drama includes Goldman offering Libya preferred equity and debt which could’ve made it one of the investment bank’s largest shareholders during the onset of the crisis, as well as intimidation and violent threats by Libyan officials.

Libya’s sovereign wealth fund, the Libyan Investment Authority (LIA), was among many funds set up by emerging economies to grow their export-based riches. When the U.S. government lifted sanctions in 2004 prohibiting American firms from doing business with and investing in Libya, Western financial institutions flocked to the oil-rich nation, according to a recent investigation by the Wall Street Journal.

The LIA, headed by chief investment officer Hatem el-Gheriani and Chairman Mustafa Zarti approached 25 different financial institutions around June 2007, when the LIA was launched with approximately $40 billion in assets. Despite forging its strongest relationships with Goldman Sachs, the LWI also invested with Societe Generale, HSBC, JP Morgan, Carlyle Group, Lehman Brothers, and Och-Ziff Capital Management Group.

Recent information, derived from “interviews with close to a dozen people who were involved in the matter, and on Libyan Investment Authority and Goldman documents,â€

http://www.forbes.com/sites/afonteve...nd-investment/