The much-anticipated trial pitting Goldman Sachs against the Libyan Investment Authority has finally begun in London, and judging from the first tranche of info, it's going to be a humdinger!
Goldman Sachs has been accused “manipulating” the Libyan Investment Authority (LIA) into making “wholly unsuitable” derivatives trades which cost the wealth fund $1.2bn and made the investment bank as much as $275m in profit.
So Lloyd and his guys (allegedly) ripped of Gadaffi's money guys to the tune of "soooo much?" Aren't the Libyans at least a little embarrassed?
The LIA told the High Court that its management team during the Gaddafi-era in 2007 and 2008 was “financially naive and unsophisticated”, allowing Goldman Sachs to “take advantage” and exercise “undue influence” over the fund.
And that's what the Libyans are saying about themselves. Wait until you get a load of what Goldman (allegedly) said about them...
When giving feedback after a meeting with the LIA, one Goldman banker told another: “you just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels… There was a bit of a clash :-)”.
Is that worse than"Muppets?"
And where was that famous Goldman Sachs gold touch client service? Wasn't anyone doing the Marty McFly and looking out for the Libyans?
In April 2008 another banker was concerned about the LIA’s lack of financial knowledge.
“They are very unsophisticated – and anyone could “rape” them,” said Goldman’s Driss Ben-Brahim, according to the LIA.
According to the LIA, Goldman really meant "anyone."
A Goldman employee "embedded" himself within the LIA early in the relationship and became "exceptionally close" to the fund. The banker, Youssef Kabbaj, organized "training" for LIA staff in London, paying for expensive entertainment and "stylish hotels," the fund said in the documents. Kabbaj claimed 22,000 pounds ($31,000) in expenses for one trip, according to filings.
The former Goldman employee also took members of the fund on holiday to Morocco where he "put them up and entertained them."
Goldman also gave a man a "highly coveted" internship at the bank because he was the brother of a key decision maker at the LIA. Kabbaj is alleged by the fund to have hired prostitutes on a trip to Dubai with the intern.
But Goldman is saying that there weren't only not prostitutes, they're also saying that the losses were a result of bad market timing and poor decision-making by their client. Also, those huge profits that Goldman was supposed to have made? They're only kinda huge...
The bank also disputed the level of profit, arguing that it made no more than $130m on the trades.
See? Barely anything. We look forward to watching this play out over the summer.
The case is expected to last for seven weeks.
Seven glorious weeks.