Libya Almost Became Largest Shareholder in Goldman Sachs

gs logolibyaLibya almost became one of the largest shareholders in Goldman Sachs. This is not some crazy Goldman Sachs conspiracy theory. But straight from the WSJ. I thought this article was important to post for two reasons: 1. it is very interesting 2. It is scary.

I am not a big believer in restrictions on investments, but strongly think that certain industries need to be protected from foreign influence. It was frightening when it was leaked that released that China is using its large holdings of US treasuries to pressure America about certain domestic and foreign policies.  Although, China only owns approximately 10% of US treasuries, that is still large enough to pressure their creditor. Unless, we get our budget under control this will only continue.

In general, foreign companies with increasing amounts of cash are investing in US companies. Prince Al Waleed owns a large stake in  NewsCorp; parent of Fox News and Wall street Journal. He also owns a large stake in Citigroup. I find it dangerous for non-US citizens to hold large stakes in media companies, and especially banks. (Disclosure I own NewsCorp, no position in Citi).

Without further to do I decided to link to this article, because I found it astonishing, and frightening that Mohmar Qaddafi almost became the largest shareholder in Goldman Sachs (also another horrendous announcement for Goldman’s reputation). Here is a quote from the article:

In early 2008, Libya’s sovereign-wealth fund controlled by Col. Moammar Gadhafi gave $1.3 billion to Goldman Sachs Group to sink into a currency bet and other complicated trades. The investments lost 98% of their value, internal Goldman documents show.

What happened next may be one of the most peculiar footnotes to the global financial crisis. In an effort to make up for the losses, Goldman offered Libya the chance to become one of its biggest shareholders, according to documents and people familiar with the matter.

Negotiations between Goldman and the Libyan Investment Authority stretched on for months during the summer of 2009. Eventually, the talks fell apart, and nothing more was done about the lost money.

An examination of the strange episode casts light on a period of several years when Goldman and other Western banks scrambled to do business with the oil-rich nation, now an international pariah because of its attacks on civilians during its current conflict. This account of Goldman’s dealings with Libya is based on interviews with close to a dozen people who were involved in the matter, and on Libyan Investment Authority and Goldman documents.

Libya was furious at Goldman over the nearly total loss of the $1.3 billion it invested in nine equity trades and one currency transaction, people involved in the matter say. A confrontation in Tripoli between a top fund executive and two Goldman officials left the bankers so rattled that they made a panicked phone call to their bosses, these people say. Goldman arranged for a security guard to protect them before they left Libya the next day, they say.

Below is the link to the full article-


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2 Comments on "Libya Almost Became Largest Shareholder in Goldman Sachs"

  1. No politics on my blog please. I wrote one political post about Egypt, which I was unfortunately dead on about. I made a one time exception, as stated in the article because it was a crucial issue that I thought the media was missing.

    I had to edit the rest of your comment.

    If you want that, you will find lots of politics on my twitter account-!/valuewalk. FYI- I am against all three wars we are now fighting in the ME. I have been a vocal critic of Obama and Bush’s foreign policies.

  2. Looks to me that the Libyans got cheated out of 1.3 billion dollars in their attempt to participate in the US equity market.

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