7 Jun 2011
Investment bank, Goldman Sachs gambled away more than a billion dollars that Libya had invested in it. The company and the dictator Muammar Gaddafi were firm financial friends in 2008. Goldman offered Gaddafi the chance to become a huge shareholder in the company - but only after losing US$1.3bn of Libya's sovereign wealth fund in just a few months in a bet on European banks and energy companies whose stocks plunged.
When the fund nearly emptied, Goldman offered to recoup losses in return for more investments from Libya. According to the Wall Street Journal, Libya would get US$5bn worth shares in return for making a US$3.7bn investment in the securities firm.
Libya agreed to buy the bank's debt with the promise of a 6% annual return over 20 years. The deal was made just before Goldman's stocks plunged in the wake of the 2008 financial crash -- a catastrophe, Goldman Sachs itself is said to have caused.
Libyan sovereign wealth officials are accusing Goldman of misrepresenting investment deals and making trades without proper authorization.
Now critics are saying that the Libyan people stand to get screwed by Wall Street.
Due to frozen assets and financial sanctions imposed by Europe, the US and the UN, Libya's sovereign wealth fund could arguably be forgotten about unless one of the the world' top financial firms is held accountable.