LONDON, April 27 (Reuters) - A dispute between Libya’s $67 billion sovereign wealth fund and Goldman Sachs over advice given on trades made in 2008 will be back in London’s High Court on May 5, with amended court papers that emerged on Wednesday adding new details.
In the ongoing litigation, the Libyan Investment Authority (LIA) alleges the Wall Street bank advised the fund to invest some $1 billion in nine trades that it claims were unsuitable and ultimately worthless.
At the time, Libya was still headed by Colonel Muammar Gaddafi, who was overthrown in 2011. The leadership of the LIA is currently being disputed by two rival chairmen.
Goldman Sachs has rejected the LIA’s allegations and is contesting the case. It maintains that its relationship with the LIA was at all “material times an arm’s length one” between banker and client.
A pre-trial review hearing has been confirmed for May 5 and a trial date is expected to be set for early June.
In re-amended claim filings seen by Reuters on Wednesday, the LIA alleges that in 2008, Goldman Sachs hired Haitem Zarti, the brother of Mustafa Zarti, the LIA’s former deputy chief, as an intern in its investment banking division.
Among details first reported in the Financial Times, the papers revealed that Haitem Zarti was paid a salary of 36,000 pounds per annum as an intern, plus a 1,000 pound housing allowance.
The LIA alleges this hiring was in breach of Goldman’s own compliance rules. In a separate filing to the High Court, also seen by Reuters, the U.S. investment bank denies this claim.
Neither side disputes the internship took place. Reuters could not independently verify the claims. Neither could it reach either of the Zarti brothers.
The papers show the LIA also alleges that Mustafa Zarti’s willingness to do business with Goldman was influenced “by the favourable treatment Goldman was conferring on his brother”.
Goldman strongly denies these allegations: “We do not believe the internship influenced in any way the LIA’s decision to enter into the trades,” the bank said in a statement to Reuters.
“The claims are without merit and we will continue to defend them vigorously.”
In its re-amended defence document, the bank says Haitem Zarti was employed as an intern, and paid the same salary as other interns.
It adds that it believed Zarti would likely have a role within the LIA in London, and the internship was tailored towards giving him training and exposure that would help him prepare for that role.
Reporting by Claire Milhench