Libya seeking return of assets ‘lost’ by Goldman Sachs, SocGen

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old libyan dinar
A Gaddafi-era Libyan dinar banknote. Photo - Alamy/FT.com

The Libyan sovereign wealth fund chairman announced on Wednesday investigations on investment losses of $1.75 billion on structured products managed by Goldman Sachs and Societe Generale are underway.

Mohsen Derregia, chairman of the Libyan Investment Authority (LIA), told reporters in Milan that the LIA is looking into how these investments were managed and compensation claims could be made.

“These were investments made in 2007 to 2008, and some of those losses are quite surprising. We’ve had losses for around $1.75 billion, of which $900 million was on a single investment with Goldman Sachs,” Derregia 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.”

Derregia said it’s not clear to him when asked what kind of structured products were involved.

Goldman Sachs declined to comment and Societe Generale could not immediately be reached for comment.

Derregia was appointed head of the LIA in April and is tasked with sifting through tens of billions of dollars in holdings and investments made by the fund worldwide by the Gaddafi regime, which was overthrown last year in a violent uprising.

“To have a clear oversight of everything will take time; it won’t be done in one or two months,” Derregia said. “Clearly, there will have to be some write-offs, although they are not huge.”

The Libyan official added that the total value of assets managed by the LIA (about $60 billion) had fallen by less than the LIA initially feared. “It’s now midway between $50 billion and $60 billion. People in Libya feared we had lost 50% of our assets. It’s not like that.”

‘Scamdal’

Derregia spoke to Italian authorities and the financial community about the LIA’s holdings in the country, which were seized in March by Italian financial police on the context that they belonged to members of the deposed Gaddafi family.

The holdings, worth about €1.1 billion ($1.39 billion), include stakes in Italy’s largest bank by assets, UniCredit, the oil and gas giant Eni and carmaker Fiat.

The LIA has contested the seizure, insisting those holdings belong to the sovereign fund, held on behalf of the Libyan government. Derregia and his lawyers said this view was backed by the Italian economy ministry’s Committee of Financial Security, which he met on Tuesday.

The next hearing in the case is on 12 July.

Derregia said that the LIA would keep its 1.8% stake in UniCredit and could buy more shares in the bank if profitable.

He said it would not make sense to sell down its Italian portfolio now, given current market conditions. “Clearly the value of the shares has declined substantially. There is no incentive for us to sell the shares now or in the foreseeable future.”

“We hold a lot of assets denominated in euros, and we already have enough bonds,” the Libyan financial investigator said when asked whether the fund would buy Italian government bonds battered by the euro zone debt crisis.

According to the Italian investigators, the seized assets were held by two Libyan sovereign funds, the Libyan Investment Authority (LIA) and the Libyan Arab Foreign Investment Company (Lafico). Authorities insist they are linked to Gaddafi and his regime which was deposed under a NATO-aided rebellion.

Also seized is the Gaddafi family’s 1.25% share in Unicredit, Italy’s largest bank, worth around €611 million ($810mn).

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