Goldman Sachs abused its
position as a relied on adviser to Libya’s sovereign wealth fund,
a lawyer for the fund said on Tuesday, in a case that has
subjected the bank’s dealings to a forensic degree of analysis. In a trial at London’s High Court, the Libyan Financial investment
Authority (LIA) is attempting to claw back $1.2 billion from the
Wall Street giant in relation to nine contested trades brought
out in 2008, saying that the trades were secured through “excessive.
impact” and “unconscionable bargaining”. The LIA says the bank made the most of its financial.
naivety by first gaining its trust, then motivating it to make.
dangerous and eventually worthless financial investments. In his closing declaration for the LIA, legal representative Roger Masefield.
stated that in the autumn of 2007, the bank had entered a space.
produced by the resignation of the LIA’s independent monetary.
specialist, and cultivated a relationship of trust.
He stated this exceeded a “normal arm’s length.
banker-client relationship” as the bank had actually presumed the role of.
a consultant. In doing so, it was not allowed to negotiate with its client.
to its own product advantage unless either it told the client.
to seek advice from an independent advisor on such deals, or.
otherwise described the dangers in a reasonable and accurate way, he.
stated. “However if the bank doesn’t do that, in scenarios where de.
facto it has actually crossed the line and started providing guidance, then it.
stands at threat,” he stated.
In scenarios where the customer profits and the danger.
hasn’t been fairly described to it, the LIA can rescind and set.
aside the trade, he included. Goldman Sachs, which rejects all the claims, preserves.
that its relationship with the LIA was at all “material times an.
arm’s length one” between banker and customer.
” We have constantly contested the LIA’s insurance claim that it was.
financially illiterate and it is clear that they understood the.
challenged trades and entered into them of their own volition,”.
the bank said in a declaration released on Tuesday. In its written closing submission, seen by Reuters, Goldman.
Sachs argues that it was only one of dozens of banks and.
banks that the LIA was dealing with, and the.
amounts invested with Goldman were just a portion of the total.
investments the LIA made at the time. In the submission Goldman argued that, instead of being.
economically ignorant, the LIA had just failed to anticipate the full.
extent of the global monetary crisis. A legal representative for Goldman Sachs is expected to deliver the bank’s.
oral closing argument later in the week.
( Editing by Pravin Char).