The Libyan Investment Authority said in a $1.5 billion lawsuit that Societe Generale SA paid about $58 million to a friend of the Qaddafi family to secure investments.
The payments to a Panama-based company owned by Walid Giahmi, who was friends with the son of deposed Libyan ruler Muammar Qaddafi, had no real purpose and were kept secret from the LIA board, according to court documents filed in London.
They were made with the aim of “influencing the LIA’s decision to enter into each and every one of the disputed trades through the payment of bribes,” the LIA said in the documents.
Libya’s sovereign wealth fund is one of dozens of small companies and government agencies that have sued lenders over deals the investors claim were too complicated to understand. The LIA also filed a Jan. 21 lawsuit against Goldman Sachs Group Inc., saying the bank made about $350 million selling it derivatives that turned out to be worthless.
“The LIA’s allegations are unsubstantiated and Societe Generale will defend these proceedings vigorously,” the bank said in a statement. “Societe Generale also wishes to make clear that as far as it is aware, it is not under investigation by regulatory or law enforcement authorities in relation to its relationship with the LIA.”
Giahmi’s lawyers also said the lawsuit was meritless.
By the time Qaddafi was deposed and killed in a 2011 coup, the wealth fund he helped establish had built up about $60 billion from the selling of the country’s oil reserves. The U.S. Securities and Exchange Commission last month requested information from hedge fund Och-Ziff Capital Management Group LLC as part of a probe into several firms’ links to the LIA.
“This claim, together with the one against Goldman Sachs that was initiated in January 2014, reflects the desire of the LIA’s new board of directors to redress previous wrongs and seek the recovery of these substantial funds as it seeks to invest and generate wealth for the people of Libya,” said AbdulMagid Breish, the LIA’s chairman, in an e-mail.
The LIA said in court documents from the SocGen suit it didn’t know exactly how the corruption worked or who received the bribes, but it believed then-executives at the LIA “received payments or other personal benefits.”
Giahmi, a Libyan who was friends with Qaddafi’s son Saif and now lives in Dubai, was the owner of Panama-based Leinada Inc., according to the LIA claim. While there’s no evidence the company provided any real advisory services, it was paid a “success fee” in relation to the investments, the LIA said.
SocGen “knew or at the very least suspected that the Leinada payments were fraudulent and corrupt payments as described above, but chose not to make further enquiries,” the LIA said in its court documents.
Giahmi “underwent a thorough investigation by Swiss, British and American regulators and opened up all his books and accounts,” his Dubai-based lawyer, Peter Taylor, said in a phone interview.
“Those earlier investigations were closed because there was no corruption” and Giahmi has told investigators he is willing to assist with the ongoing SEC inquiry, Taylor said. The London claim “is just opportunistic litigation by the LIA.”
Mohsen Derregia, the former chairman of the LIA, said in March 2013 the fund would seek an explanation from SocGen about how its investments lost as much as 80 percent. Between 2007 and 2009, the LIA invested about $2.1 billion with the French lender, according to its court documents.
The case is: The Libyan Investment Authority v Societe Generale SA, High Court of Justice, Queen’s Bench Division Commercial Court, 14-260.