The Libyan Investment Authority held billions of dollars comprised of oil wealth channeled by Gaddafi into foreign investments. Much of it made its way into the coffers of Goldman Sachs. The losses were staggering.
Goldman Sachs lost 98 percent of the $1.3 billion entrusted to them by Muammar Gaddafi in 2008. The Wall Street Journal
reported "In an effort to make up for the losses, Goldman offered Libya the chance to become one of its biggest shareholders, according to documents and people familiar with the matter."
Gaddafi was not best pleased with the losses. According to WSJ "A confrontation in Tripoli between a top fund executive and two Goldman officials left the bankers so rattled that they made a panicked phone call to their bosses, these people say. Goldman arranged for a security guard to protect them before they left Libya the next day, they say."
When the rebel uprising began in 2011 the LIA's assets were frozen and according to the Independent
Goldman Sachs was understood to still hold at least three different accounts containing LIA money; two in its asset management division and one in foreign exchange, a legacy of the initial $1.3bn." However, the bank refused to disclose how much Libyan money it still held and there were no further talks between Libya and GS.
Former British Prime Minister Tony Blair went to Tripoli to lobby on behalf of JP Morgan after GS had already lost Gaddafi millions. Blair apparently said "that unlike some other deals - notably some investments run by the US bank Goldman Sachs - JP Morgan's had never turned bad" the Telegraph
Conveniently for all concerned Muammar Gaddafi's days were numbered, but now it appears the missing billions are under investigation and Goldman Sachs may actually come under scrutiny.
Alarabiya reported Mohsen Derregia, chairman of the Libyan Investment Authority (LIA) said last week that some of the losses were quite surprising, a rather blatant understatment. He said “We will have to see how these structured products were created, valued and managed. Then we will talk to the investment houses and see if we can claim a refund.”
Libya's frozen assets were never completely handed back to the country after Gaddafi's murder and there has been little attempt to actively pursue missing millions. Whether the investigation announced last week turns out to anything more than perfunctory is anyones guess but the findings will be anticipated eagerly and GS could well find itself under the spotlight. However, key players including Gaddafi will not be around to expose any dirt that may be hidden.