Libya’s $67bn national investment fund is seeking damages from Goldman Sachs, saying the bank encouraged it to make complex, money-losing investments.
The Libyan Investment Authority, which runs the fund, is looking to claw back $1.2bn (£840m) it says was lost through nine disputed trades conducted in 2008.
The Libyans said the trades were made under “undue influence”.
Goldman said the claims were without merit and it would fight them vigorously.
The trial started on Monday at the High Court in London.
The Libyan Investment Authority said that Goldman Sachs gained its trust and then abused it by encouraging it to participate in complex trades that it did not understand.
“The disputed trades were inherently unsuitable for a nascent sovereign wealth fund such as the LIA and Goldman Sachs knew (or at the very least suspected) that the LIA did not properly understand the trades, which were highly structured, complex and risky, a document submitted to the court by the LIA said.
However Goldman Sachs says that the LIA is responsible for the losses generated.
“The LIA selected the underlying stocks based on its own research, conducted over weeks or months, and did so because, like other Middle Eastern sovereign wealth funds, it thought they were undervalued,” the bank stated in a document submitted to the court.
Rival chairmen are laying claim to control of the LIA, as factions in Libya are battling for control of the reigns of power in the country, and the nation’s oil production has been hit by fighting.
The fund was set up in 2006 under the rule of Col Muammar Gaddafi to manage the huge revenues generated by Libya’s oil sales.
The case is scheduled to run for seven weeks.