Why Goldman Was Bound to Win This Suit Over LIA
On October 14, 2016, the suit between the Libyan Investment Authority and Goldman Sachs was finally decided. It was a sad day for Libya as the LIA’s claims were comprehensively defeated and debunked. However, this might well be because the Libyans took the completely wrong approach to the lawsuit. Rather than correctly saying that Goldman was complicit in Qadhafi era corrupt practices which they certainly were, the Libyans alleged that they were babes in the arms and that they got hoodwinked by crafty, evil Goldman Sachs. The later narrative doesn’t hold up as I commented for Bloomberg News. The former narrative is almost certainly true and Goldman and other firms probably broke the Foreign Non-Corrupt Practices act and if they had been sued in this vein, Goldman would likely have lost.
As readers of my blog know, I firmly support the Western engagement with Qadhafi from 2003-10. It got rid of his WMD and brought the internet to Libya and gave the country a chance for reform. I have defended engagement prominently in The Spectator. Yes, engagement had its flaws. Yes some bad wall street firms like Goldman (who i have no love lost for ) benefited from it. I believe in engagement with all regimes. North Korea, Iran, you name it. That is my politics. It is the Libyans fault 100% if they did bad trades. If Goldman tricked them saying they were sure to make money, well caveat emptor. So long as Goldman didn’t do trades that were different than the Libyans agreed to than Goldman is not at fault. The Libyans approved the trades and not only were they not babes in the woods. Furthermore, I have ever reason to believe that corrupt individuals like Mustafa Zarti did the trades knowing they WOULD LOSE MONEY ON PURPOSE!!!
As for Goldman’s complicity in Zarti’s and Saif’s and others losing Libya’s sovereign wealth. Well, there are no laws against selling you bad trades and there shouldn’t be. That doesn’t make Goldman angels. they are sleazy bastards and I wanted Bernie to win to break up the big banks but that is a domestic American political issue. On the world stage, the Libyans have every right both now and then to squander their money. And although now Libya doesn’t have sovereignty enough to manage its own assets. In the old days, Qadhafi most certainly had sovereignty and no matter how corrupt his officials were they had every right for them to lose Libya’s wealth. It is not illegal for them to do so. Do you know the implications to global finance it would have had if the LIA won after making the argument it ded? All of a sudden crazy countries and firms could sue any investment bank if they ever lost money saying they didn’t know what they were investing in… the result would be chaos. No one would be able to do speculative business for fear of getting sued. I stand by this. I stand by capitalism and free trade global. But it is a sad day as it should have been former Qadhafi officials who got locked up and were made to pay for their corrupt practices but that is not the court case that Breish and Baruni brought before the court in London. These corrupt former regime officials tried to exonerate their neligence by blaming their losing the Libyan people’s money on outsiders when sadly it is actually completely and totally their own fault.