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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsGoldman Sachs Sued for Selling Libya Billions in “Worthless” Options
Richard Smallteacher
Goldman Sachs, the Wall Street investment bank, is being sued in London for selling Libya worthless derivatives trades in 2008 that the countrys financial managers did not understand. Libya says it lost approximately $1.2 billion on the deals, while Goldman made $350 million.
At the time, the Libyan Investment Authority (LIA), which invests profits from the countrys oil and gas exports, had assets worth $60 billion under former dictator Muammar Gaddafi.Goldman Sachs convinced LIA to buy long-term call options on six companies: Allianz, a German insurance and investment company; Banco Santander, a Spanish bank; Citbank, a U.S. bank; Électricité de France, a French state utility; ENI, an Italian oil company; and UniCredit, an Italian bank.
What the Libyans did not understand was that if the stocks in these six companies did not rise, their investments would become worthless. Instead the LIA executives weretaken in by a trip to Morocco as well as small gifts, such as aftershaves and chocolates and an offer of an internship for Mustafa Mohamed Zarti, the brother of the Libyan funds deputy executive director, in Dubai and London.
The unique circumstances allowed Goldman Sachs to take advantage of the LIAs extremely limited financial and legal experience to deliberately exploit its position of influence and to take advantage in a way that generated colossal losses for the LIA but substantial profits for Goldman Sachs, said LIA Chairman AbdulMagid Breish in a statement.
more
http://rinf.com/alt-news/latest-news/goldman-sachs-sued-selling-libya-billions-worthless-options/
Goldman Sachs = Nigerian Prince scammers
Nye Bevan
(25,406 posts)I bet quite a few DUers understand this concept. Perhaps before spending $1.2 billion they should have made sure to understand what they were purchasing.
Rex
(65,616 posts)how it works? For billions of dollars?! No doubt GS used their clout to 'wine and dine' their victims...buyer beware.
Nye Bevan
(25,406 posts)does not really impress me as a legal argument.
I doubt a judge will show them any sympathy either.
badtoworse
(5,957 posts)If they didn't understand the concept (hard to believe they were that ignorant and running around with $1.2 billion), then they should have had qualified financial advisors.
They should have blown their wad at the track or in Las Vegas - it would have been a lot more fun.
dixiegrrrrl
(60,010 posts)That Goldman offered them products which failed, or which cost much more than they sighned up for.
Greexe claimed that Goldman ripped them off.
And like the rest of you reading this, my question is.....how the hell is it that anyone trusts the banks at all???
solarhydrocan
(551 posts)plus, they would never lie
People like John Perkins have told us all how it works
https://en.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man
John Perkins - Hit Men, Jackals, and the Truth about Global Corruption
bvar22
(39,909 posts)Libya was not in debt to international bankers.
It did not borrow cash from the International Monetary Fund for any "structural adjustment".
It used oil money for social services - including the Great Man Made River project, and investment/aid to sub-Saharan countries.
Its independent central bank was not manipulated by the Western financial system.
All in all a very bad example for the developing world.
http://www.atimes.com/atimes/Middle_East/MD27Ak01.html
...but he was a ruthless dictator who was killing his own people!!!!
(Doesn't he know that is OUR job??!!)
I'm glad the Goldman-Sachs problem is being looked at.
I ran across claims that GS had defrauded the Libyan Treasury of over $5Billion back in 2011.
I was trying to find out WHY, all of a sudden, Libya was a huge problem needing a BIG dose of our Shock & Awe Freedom Bombs right funkn NOW,
and the GS allegations was one of the things that turned up.
I figured it was DOA because of our intervention,
but am somewhat reassured to see it is still alive.
Ichingcarpenter
(36,988 posts)CHRIS HEDGES, AUTHOR AND ACTIVIST:
Goldman Sachs, which received more subsidies and bailout-related funds than any other investment bank, because the Federal Reserve permitted it to become a bank holding company under its emergency situation, has used billions in taxpayer money to enrich itself and reward its top executives.
It handed its senior employees a staggering $18 billion in 2009, $16 billion in 2010, and looks set to hand out $10 billion in megabonuses in 2011. This massive transference of wealth upwards by the Bush and Obama administrations, now estimated at a staggering thirteen to fourteen trillion dollars, went into the pockets of those who carried out fraud and criminal activity rather than the victims who lost their jobs (some of whom we'll hear today), their savings, and often their homes.
Goldman Sachs' commodities index is the most heavily traded in the world. The company hoardes rice, wheat, corn, sugar, and livestock and jacks up commodity prices around the globe, so that poor families can no longer afford basic staples, and many literally starve.
Goldman Sachs is able to carry out its malfeasance at home and in global markets because it has former officials filtered throughout the government and lavishly funds compliant politicians, including Barack Obama, who received $1 million from employees at Goldman Sachs in 2008 when he ran for president.
These politicians in return permit Goldman Sachs to ignore security laws that under a functioning judiciary system would see the firm indicted for felony fraud, or, as in the case of Bill Clinton, these politicians pass laws such as the 2000 Commodity Futures Modernization Act, which effectively removed all oversight and outside control over the speculation in commodities, one of the major reasons food prices around the world have soared.
In 2008 and 2010, prices for crops such as rice, wheat, and corn doubled or tripled, making life precarious for hundreds of millions of people. And it was all done so a few corporate oligarchs, the 1 percent, could amass personal fortunes in the tens of millions and often hundreds of millions of dollars.
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7589
econoclast
(543 posts)Now don't get me wrong. I'm certainly not saying that GS is above trying to pick-off Libya. But really .... Your job title is 'financial manager' and you are running 60 billion dollars and you don't know what an Option is??? If that is really the level of sophistication then somewhere in Libya are warehouses full of Ginsu knives, Popeil Pocket Fishermen and that hair-in-a-can spray. If they are that dumb, and Goldman was really trying to pick them off, GS would have walked away with the entire 60 billion Libya had to invest and not just 350 million.