Goldman had 'inappropriate' relationship with Libyan fund: court filing
By Clare Hutchison
LONDON (Reuters) - A lawyer seconded to the Libyan Investment Authority, which is suing Goldman Sachs over $1 billion of trades that ended up worthless, was "shocked" by the bank's "inappropriate" relationship with the fund, according to court filings.
In a suit filed at London's High Court, the Libyan Investment Authority (LIA) claims the Wall Street investment bank exploited a position of trust by encouraging the sovereign wealth fund to invest more than $1 billion in a series of equity derivatives trades that expired as worthless in 2011.
The fund, which became a Goldman client in 2007, alleges the trades "whilst extremely profitable for GSI (Goldman Sachs International), were inherently unsuitable for a sovereign wealth fund like the LIA", court documents show.
Goldman on Monday reiterated an earlier statement saying it believes this case is entirely without merit and that it intends to contest it vigorously.
In a witness statement released as the two parties met in court for the first time on Monday, Catherine McDougall, who was seconded to the LIA while working at London law firm Allen & Overy, described her discussions with the fund's equity team about the disputed trades.
"None of the equity team understood in any depth what the disputed trades involved," she said in the statement. "I asked them where the due diligence was and they responded "due what?""
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