A Libyan Investment Authority executive threatened two Goldman Sachs Group bankers at a 2008 meeting in Tripoli, telling them the lender had “screwed” the sovereign wealth fund, according to the LIA's evidence at a London court hearing Monday.
Former LIA executive Mustafa Zarti was so angry about bad investments that he cursed at the two bankers, Youssef Kabbaj and Nick Pentreath, in English and Arabic after questioning some of the fund's 2008 trades with Goldman, according to Catherine McDougall, a lawyer at a London law firm who was temporarily assigned to the LIA at the time.
“Get out of my country,” Ms. McDougall recalled Mr. Zarti as saying in a witness statement she prepared for the LIA in a $1 billion lawsuit against Goldman. The bankers gathered their things and left quickly, she said.
Libya's sovereign wealth fund sued Goldman Sachs over money-losing investments made in 2008, saying the bank exploited the LIA's inexperience to sell risky derivatives. The case is the largest of dozens of U.K. lawsuits against multiple lenders where clients from German water providers to Italian regions say they were sold unsuitable financial products.
Mr. Zarti “launched into a very angry tirade, saying that he had a bad side as well as a good side and that he could come after their families,” Ms. McDougall said in the statement.
The $60 billion fund, established under former Libyan ruler Moammar Gadhafi, grew to be Africa's second-largest sovereign wealth fund by the time Mr. Gadhafi was deposed and killed in 2011. Some of the fund's investments proved disastrous, leading to attempts to restructure deals, regulatory investigations and multibillion-dollar lawsuits.
Ms. McDougall was recalled from Libya in August 2008 after she was told by her law firm, Allen & Overy, that the LIA had made a complaint about her. She resigned the same month without any disciplinary action being taken, and said in her witness statement, “I felt quite traumatized by the experience.”
This week's hearing is the first in the case that was filed in January. The LIA asked to schedule the lawsuit for a 30-day trial in January 2016.
Roger Masefield, a lawyer for the LIA, told the judge at the hearing that fund executives didn't understand they were investing in derivatives instead of shares, and weren't aware they were in a position to negotiate better terms for the trades.
The New York-based Goldman Sachs also said in its court documents that the lawsuit is a “paradigm of buyer's remorse.”
The LIA “freely entered into commercial bargains which have turned out badly for it,” Goldman Sachs said. The fund's “vague and generalized allegations of a relationship of 'trust and confidence,'” are “utterly unconvincing,” the bank said in the documents.