Goldman Sachs hired prostitutes to win Libyan business, court told


Goldman Sachs paid for prostitutes, business travel and five-star hotels in an attempt to win business from the Libyan Investment Authority (LIA), the UK high court has been told.

The accusations were made at the hearing for a claim of $1.2bn (£846m) from the Wall Street bank by the fund set up under the regime of Libyan dictator Muammar Gaddafi.

Roger Masefield, a QC for LIA, set out the background to nine trades that Goldman Sachs executed for the Libyan sovereign wealth fund between January and April 2008. When the losses emerged, Masefield said one Libyan official described Goldman as the “bank of mafiosa”.

While the LIA lost almost all its investment through the trades, one of which was the largest that the bank had undertaken in a single stock, Goldman Sachs generated “eyewatering” profits of more than $200m from the trades, Masefield said.

The LIA, Masefield told the court, felt betrayed as the trades generated excessive profits for Goldman and were unsuitable for the LIA, which was staffed by individuals who had not been appointed on merit.

The LIA was set up in 2006 to invest in the country’s oil wealth as its status from a pariah state was being lifted. Masefield argued that it was a nascent sovereign wealth fund with limited financially sophisticated abilities to understand the so-called jumbo and elephant trades. Goldman is disputing the claim, which was filed in 2014, and its lawyers will address the court on Tuesday.


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