Trades with Goldman too complex for Libya's SWF: witness tells court

Fri Jul 15, 2016 3:03pm EDT
 
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By Claire Milhench

LONDON (Reuters) - Nine disputed trades that Libya's sovereign wealth fund (SWF) entered into with Goldman Sachs were unsuitable by "dint of risk and complexity", according to an expert witness at a trial in London's High Court.

The Libyan Investment Authority (LIA) is attempting to claw back $1.2 billion from Goldman Sachs from the trades carried out in 2008. It argues the bank took advantage of its financial naivety by first gaining its trust, then encouraging it to make risky and ultimately worthless investments.

Goldman Sachs denies the allegations and says the trades in question "were not difficult to understand". It has described the LIA's claim as "without merit".

Martin Harrison, managing director of SUMMA Ltd, a management consultancy, appeared in court as an expert witness for the LIA to address the question of suitability.

He said in his report filed with the court: "If an SWF enters into an investment which is of a sophistication (in terms of risk and complexity) that falls utterly beyond the competence of the institution to cope with it in terms of expertise and organization, then that investment is without question unsuitable."

The report, seen by Reuters, said Harrison had in the past served as an investment adviser to the Abu Dhabi Investment Authority and to the Government of Singapore Investment Corporation. He also headed group asset management at the Qatar Investment Authority.

DERIVATIVES   Continued...

 
The logo of Dow Jones Industrial Average stock market index listed company Goldman Sachs (GS) is seen on the clothing of a trader working at the Goldman Sachs stall on the floor of the New York Stock Exchange, United States April 16, 2012. REUTERS/Brendan McDermid/File Photo