Opposing Libya wealth fund factions seek common ground in bank lawsuits

Two opposing factions of the Libyan Investment Authority are to apply to the UK High Court for a receiver and a manager to handle two separate lawsuits- against Goldman Sachs and Société Générale.

Hassan Bouhadi
Hassan Bouhadi

Lawyers representing two opposing factions of the Libyan investment Authority are to apply to the UK High Court for a receiver and a manager to handle two separate lawsuits it is bringing against the Goldman Sachs and Société Générale.

The LIA is suing Goldman and SocGen in two unrelated cases, but litigation has “ground to a halt” in recent months as two rival factions are each claiming to represent Libya’s sovereign wealth fund.

A London court hearing was told on Friday that Libya’s civil war and the formation of two rival governments had led to a power struggle within the LIA. The Tripoli-headquartered LIA is chaired by Abdulmagid Breish, and the Tobruk-headquartered LIA is chaired by Hassan Bouhadi.

A litigation committee set up by the two rival LIA factions had been disbanded in April, and as a result Enyo, the legal group bringing the two lawsuits, had ended its long-term involvement in the case. Both LIA factions then appointed new lawyers.

The lawsuits were in a “state of chaos”, a lawyer for a witness in the SocGen case told the High Court last month.

However, Ricky Diwan, representing the Tripoli-based faction, told the court that both he and the Tobruk-based LIA planned to file a joint application to the High Court in the next week asking for accountancy group BDO to be appointed as receiver and manager of the litigation. Enyo would then be reinstructed as lawyers in both lawsuits.

Diwan told the court that there had been a “huge amount of work around the clock” to bring the two sides together to agree to a solution.

“The litigations are being closely watched by the people of Libya who expect the LIA to pursue those who defrauded the sovereign wealth fund of Libya in the late 2000s,” Bouhadi said. “The Board seeks to ensure that no challenge to its authority will prevent the Libyan people's interest being best served.

"We are advancing in the completion of the request for a Receiver to be appointed solely for these cases and to satisfying the needs of the court in doing so, but there is further ground to cover before all is finalised. We anticipate that this will be achieved in the time the court has allowed."

Adrian Beltrami, representing SocGen, told the court the “circumstances were extraordinary” and the forthcoming application to appoint BDO was “not a solution; it’s a fix”. He said that the bank wanted to know whether this was an issue “capable of real solution or not”.

The LIA filed a $1.5bn lawsuit against SocGen, Libyan businessman Walid Al-Giahmi and Leinada, a Panamanian company controlled by Giahmi, in relation to payments relating to five trades.

The action is being vigorously defended and the parties deny wrongdoing.

In a separate legal action, the LIA is suing Goldman Sachs over complex trades, alleging that the US investment bank “exploited” the wealth fund’s limited financial experience, forcing it into risky and ultimately lossmaking investments. Goldman has denied any wrongdoing.