Goldman exec paid for prostitutes, Libyan fund alleges in London trial
By Claire Milhench
LONDON (Reuters) - A Goldman Sachs executive footed the bill for prostitutes and the bank paid for a lavish trip to Dubai for the brother of a decision-maker at Libya's sovereign wealth fund, a lawyer for the fund alleged on Monday, in a case it has brought against Goldman in London's High Court.
The Libyan Investment Authority (LIA) is attempting to claw back $1.2 billion from nine trades it carried out with Goldman Sachs in 2008.
In the suit, the $67 billion fund argues that the U.S. investment bank took advantage of its financial naivety by first gaining its trust, then encouraging it to make risky and ultimately worthless investments in equity derivatives.
Goldman Sachs denies all the allegations. "The claims are without merit and we will continue to defend them vigorously," the bank said in an emailed statement to Reuters on Friday.
The LIA's claim hinges in part on its allegations that the trades were procured under "undue influence". It specifically cites an internship that Goldman Sachs provided for Haitem Zarti, the brother of Mustafa Zarti, the LIA's former deputy chief and a key decision-maker at the fund.
The LIA alleges that Mustafa Zarti's willingness to do business with Goldman was influenced by the favorable treatment it was conferring on his brother in providing an internship. Neither side disputes that the internship took place.
In his opening statement on Monday for the LIA, lawyer Roger Masefield said that in February 2008 Goldman Sachs sales team executive Youssef Kabbaj had flown Haitem Zarti from Morocco to Dubai at Goldman Sachs' expense.
According to the LIA's claim, accommodation at the five-star Ritz Carlton was also paid for by Goldman, whilst Kabbaj arranged for two prostitutes to spend the evening with them at a cost of $600, Masefield said. Continued...