(January 23, 2014) — The $65 billion Libyan Investment Authority has filed a lawsuit against Goldman Sachs in London’s High Court.
“Goldman Sachs abused the relationship of trust and confidence with the then newly-formed LIA, being the sovereign wealth fund of the Libyan people,” a spokesman for the fund, told Bloomberg. The fund was said to have suffered “significant losses”.
The case, labelled as The Libyan Investment Authority v. Goldman Sachs International to be heard in the High Court of Justice, Chancery Division, is around the selling of structured products.
The sovereign wealth fund lost approximately $1.75 billion investing in the products in 2007 and 2008, $900 million of which was with Goldman Sachs.
This isn’t the first time the fund has taken its asset managers to task over poorly performing assets. In June 2013, Mohsen Derregia, the fund’s former chairman, demanded an explanation from Societe Generale on how derivative contracts lost about $1 billion.
“Losses between 15% and 16% are considered acceptable, but our shares devalued by up to 80%,” Bloomberg reported him saying in an interview. “We want to know what happened.”
Separately, the US Securities and Exchange Commission is probing Goldman Sachs’s dealings with the LIA for possible violations of American anti-corruption laws. The fund has said it is cooperating with the authority.
Goldman Sachs has faced a raft of litigation from institutional investors since the financial crisis began. In April 2013, Dutch pension giant ABP has settled out of court with the investment bank on a case brought over the sale of residential mortgage-backed securities between 2005 and 2007.
In April 2012, Pensioenfonds Vervoer, the $13.5 billion pension fund of Dutch transport workers, filed two claims against Goldman Sachs Asset Management totalling up to €240 million ($300 million) at the High Court in London. The case is yet to be completed.
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