Goldman Sachs has been hearing a lot of things from the Libyan Investment Authority in a London courtroom recently. That the bank pounced on the sovereign wealth fund like a wounded animal after the U.S. lifted sanctions on Libya. That its bankers got a better deal for the hookers they arranged for LIA officials than for the LIA itself. That they took advantage of the “sea of confusion” at the LIA and its “financially naïve and unsophisticated” staff.
Goldman has heard it all, and has a counterargument: YOU KNEW EXACTLY WHAT YOU WERE DOING.
“The LIA fully understood the disputed trades and obtained exactly the exposure which it wanted,” Mr. Vella said in his witness statement. At the time of the Libyan transactions, Mr. Vella was a London-based leader of Goldman’s growth-markets business. “The underlying shares did not perform as it had anticipated.” The LIA has said its officials had little understanding of finance and that the fund managers believed they were buying actual shares in companies including Citigroup Inc. through the trades. The cash-based transactions were tied to movements in the share prices of companies including Citigroup but didn’t confer ownership of the shares. Mr. Vella said that LIA officials including Mohammed Layas, then chief of the fund, had experience in finance and understood markets. Mr. Vella said that Libyan officials including Mr. Layas, who died last year, understood the difference between purchasing shares and equity derivatives.