SocGen Faces Bribery Claims in Libya Wealth Fund Suit

Monday, March 31 2014 @ 08:57 am EDT

Contributed by: Don Winner

By Kit Chellel - 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 $60 billion 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. (GS), saying the bank made about $350 million selling it derivatives that turned out to be worthless.

An e-mail to three SocGen spokesman in France seeking comment didn’t get an immediate response.

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 (OZM) 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.

Giahmi was a director at U.K. company W.M.T Property Developments Ltd., according to the companies register. The company was wound up in 2012 by insolvency firm Ian Franses Associates. Franses declined to provide contact details for Giahmi in an e-mail, saying his work was confidential.

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.

The case is: The Libyan Investment Authority v Societe Generale SA (GLE), High Court of Justice, Queen’s Bench Division Commercial Court, 14-260.

Editor's Comment: So the (now dead) dictator Muammar Qaddafi, who ruled Libya from 1969 to 2011 (42 years) - spent most of his time sucking oil money out of the ground. He managed to stash 60 billion dollars, and and now his son is using Panama based companies to pay bribes in exchange for contracts. Great. Sure, that makes Panama look better on the International scene - the place where scumbag dictators go to launder their ill-gotten booty. And by the way, today Libya's GDP per capita (PPP) is no better than it was when Muammar Qaddafi took over. In fact, Panama is doing better in this category which means the Panamanian people are "richer" than the Libyan people - even without the oil money. Because they never got the oil money, the dead scumbag dictator did.

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