Bribed With Prostitutes, Scammed Of $1.2 Billion – Libya Sues Goldman Sachs

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Jun 14 2016
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Goldman Sachs Group Inc. is being investigated by U.S. investigators whether the American banking firm broke the law when it didn’t sound an alarm about a suspicious transaction in Malaysia. At issue is US$3 billion Goldman raised via a bond issue for Malaysian state investment fund 1Malaysia Development Bhd – 1MDB.


The 147-year-old bank might have breached the U.S. Bank Secrecy Act, if it can be established that the banker was working hand in glove with 1MDB in sending half of the money raised to offshore accounts, with some later ending up in Prime Minister Najib Razak’s private bank account. In short, Goldman could be involved in money laundering.

Tim Leissner and Wife Kimora Lee Simmons - Goldman Sachs and 1MDB Scandal

While Goldman Sachs seems innocent in the case of 1MDB scandal, another explosive revelation shows the American bank is nothing but one of financial big boys willing to do anything for money. And that includes paying for prostitutes, private jets and 5-star hotels and held business meetings on yachts to win business.


The Libyan Investment Authority (LIA), the country’s sovereign-wealth fund, is suing Goldman Sachs for US$1.2 billion (£846 million; RM4.9 billion). LIA are claiming for losses on 9 trades that Goldman Sachs executed for the fund between January and April 2008. Those trades expired worthless in 2011, wiping off almost all of LIA’s investment through the trades.

Libyan Investment Authority

However, Goldman earned about US$222 million (£156.6 million; RM908 million) in profits from those trades. If that was not pain enough, emails provided to the court show how Goldman executives insulted LIA’s financial knowledge saying – “They are very unsophisticated – and anyone could ‘rape’ them.”


Besides describing the Libya sovereign wealth fund as having “zero-level” financial sophistication, another Goldman executive wrote to a colleague that “you just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels.

Goldman Sachs - Logo on Trader Shirt

Goldman denies wrongdoing as the case is being heard in the High Court in London. One former Goldman executive – Youseff Kabbaj – had been instructed to “stay a lot in Tripoli. It is important you stay super close to clients on a daily basis. Teach them, train them, dine them.” And so, Mr. Kabbaj did as what former Goldman Sachs Southeast Asia chairman, Tim Leissner, had done for 1MDB.


In the 1MDB scandal, Mr. Leissner had recommended that his firm hire the daughter of Jamaludin Jarjis, a senior politician and close aide to Malaysia’s Prime Minister, Najib Razak, as a bank analyst in Singapore in 2010. In the case of LIA, Mr. Kabbaj had arranged for an internship for Haitem Zarti, the younger brother of Mustafa Zarti, the LIA’s former deputy chief.

Col. Gadhafi's son, Saif al-Islam Gadhafi (L) with Mustafa Zarti

Clearly, both Mr. Leissner and Mr. Kabbaj had done their respective role in hoping to influence decisions by the investment funds, 1MDB and LIA respectively. After successfully arranged an internship, which paid US$51,000 (£36,000; RM208,800), at the bank for Haitem Zarti, Mr. Kabbaj texted Mustafa Zarti on April 17, 2008 with the “good news”.


In the following days, Mustafa Zarti committed to the largest four disputed trades with Goldman, involving payments of more than US$828 million. But that was not all. Mr Kabbaj took Haitem Zarti on holidays to Morocco on various occasions. Mr Kabbaj also took him to Dubai for a conference, with the business class flights and 5-star Ritz Carlton being paid by Goldman Sachs.

Libya Investment Authority Sues Goldman Sachs - A Pair of Prostitutes

The fun didn’t stop there. Documents submitted by the Libyans show that during that trip Mr Kabbaj went so far as to arrange and pay US$600 for “a pair of prostitutes to entertain them both” one evening. The internship offered by Goldman Sachs “has been and may still be the subject of investigation” by the Securities and Exchange Commission in the U.S.


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