Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
bl06cheat.jpg
So what’s Libya up to?
The North African nation is lumbering on the road to recovery. It may have left behind the NATO-backed revolt of 2011 that toppled Muammar al-Gaddafi. But Libya is still struggling to form its first fully elected democratic government and trying to write a constitution, all the while dodging miscellaneous kidnappings and assassination attempts on the few leaders it has. It claims to have destroyed Gaddafi’s bequest of chemical weapons. It’s also suing Goldman Sachs.
Gunning for the big daddy of investment banks already?
Seems like it. The country’s sovereign wealth fund, the Libyan Investment Authority (LIA), said in a lawsuit filed recently in London’s High Court that the country was misled about investments that Goldman had made on its behalf during the Gaddafi regime.
How much money are we talking about?
A little over a billion dollars, all of which was lost in the 2008 meltdown. Regardless, it says, Goldman managed to snag fees of $350 million on the side.
They blew a billion and the country had no clue?
The picture doesn’t paint Libya’s money managers as the brightest when it comes to fancy derivative trades. According to a report by the UK’s The Independent, the LIA’s “poorly qualified and naive staff were courted with chocolate and aftershave and were lavishly entertained on a corporate credit card issued to Youssef Kabbaj, the bank’s former head of North Africa”.
Chocolate and aftershave, huh?
And luxury trips to Morocco, Kabbaj’s native country. Not to mention a coveted Goldman internship for the brother of the fund’s deputy director. In retrospect, Libya now realises Goldman was all along abusing its “trust and confidence”.
Which investments did Goldman call wrong?
To cut their complex and necessarily confusing derivative structures to size, essentially, Goldman made $1 billion-worth long-term bets that shares of six companies, including Citigroup, would rise over a three-year period. The shares tanked, the options expired, and a billion dollars went poof.
Poor souls. All that hard-earned oil money down the sinkhole.
It all began when the UN lifted economic sanctions against Libya in 2003 and the US lifted its own in 2004. As eager hedge funds from the West began to look for West Asian money sloshing around, the $60-billion LIA was created in 2006. Libya, however, didn’t seem to have the technical expertise to understand where its money was going. The Independent says the LIA’s offices didn’t even have computers installed when the hedge funds first came in and book-keeping was shoddy. One report said that the LIA didn’t sign an agreement authorising trade in derivatives, neither were they aware of trades, in some cases, even months after they were made.
I’m surprised they haven’t had any trouble before this.
They did, actually. A 2011 Financial Times report found that Sociétié Général had made a $1 billion bet on behalf of the LIA on its own shares, shares which promptly plummeted in value.
But why bring it up now? Didn’t everybody, except maybe Goldman, lose money after 2008?
One explanation appears to be that Libya wants to file lawsuits against erring bankers before the statute of limitations kicks in.
Besides, once the 2011 war began and sanctions were imposed again, Goldman is believed to have cut all ties with its client.
So what happens to Goldman in all this?
The bank says the charges are rubbish and will possibly defend itself saying there is always the risk of loss in trading. The case definitely doesn’t help with the bank’s street cred, but when has Wall Street cared?
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Citroen’s first vehicle sports a novel design and European interiors. It is also meant to be as comfortable as ...
The pandemic is only the tip of the iceberg that the country’s cash-poor airlines — both regional and national ...
The government is yet to specify the framework of its recently announced old vehicle scrappage policy
Here is a checklist that equips you to discern the market nuances
The fund has consistently outperformed S&P BSE 100 TRI over one, three and five years
Bond yields are likely to go up and so will the dollar; these two factors can be a drag on bullion prices
Returns are superior to immediate annuity plans, but SCSS can secure better rates for new investors sooner if ...
With the public looking beyond mainstream media for reports from the ground, independent digital platforms are ...
While Supreme Court has cleared the way for women seeking longer tenures and senior roles in the Indian Army, ...
Mughal Gardens in the Capital open to visitors — albeit with Covid-19 protocol — for the annual Udyanotsav
Salty, buttery, cheese coated or with maple syrup and bacon — popcorn is lending its adaptable self to gourmet ...
Its name is the starting point of a brand’s journey and can make a big difference in the success sweepstakes
Sober spirits are the in thing
A peek into where ad spends went last year and where they are headed tomorrow
Can Swiggy Instamart disrupt the ecommerce groceries space, currently ruled by the Amazons and Big Baskets? ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor