Massacre of Innocents

You poor, sweet darlings . . . Let that be a lesson, never get mixed up with the big-time boys!

We’re talking here about the Libyan Investment Authority (LIA), ready to go to court in London against Goldman Sachs, accusing it of taking on the LIA as a client, only to turn around and hoodwink it in a derivatives deal.

According to the Fund, which controls $60 billion, the bank is said to have “profited in an abusive manner from the LIA’s weakness” and to have pushed it to enter into nine derivatives transactions, with among others Citigroup, EdF [= √Člectricit√© de France], Santander and ENI [the Italian state petroleum company], with the goal of obtaining “substantial profit margins” from a total value of one billion dollars . . .

Due to the [economic] crisis, these transactions “lost almost all of their value” and expired in 2011, but the Fund estimates that Goldman Sachs nonetheless succeeded in obtaining a profit [i.e. for itself] of 350 million dollars.

What can one say here? For one thing, this case is being put forward for actions dating back to 2006, i.e. back when Qaddafi was Libya’s dictator, and I doubt there is anyone left ready to shed too many tears for his sake. What’s more, it seems Goldman plied the key Libyan decision-makers with expensive gifts, including luxury visits to Monaco.

Still, this sort of account cannot but reinforce the impression that Goldman operates on some variation of Groucho Marx’s old saw “I wouldn’t want to be part of any club that would accept me as a member,” only here it is “Anyone who would willingly be our customer must be rather stupid, so let’s take them to the cleaners!” Don’t take my word for that impression: that is exactly what has inspired so much resistance to Goldman’s current proposal that it purchase an ownership share in Denmark’s national energy company.

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