Libya fund accuses SocGen of paying $58 million in bribes
Tuesday, April 1, 2014 at 7:28AM
Julie DiMauro in FCPA, LIA, Leinada Inc., Libya, Libyaan Investment Authority, Muammar Gaddafi, Och-Ziff, Saif al-Islam, Societe Generale, Walid Giahmi

Libya's sovereign wealth fund has filed a $1.5 billion lawsuit against Société Générale S.A., accusing it of funnelling tens of millions in bribes to associates connected to former Libyan dictator Muammar Gaddafi.

The Libyan Investment Authority (LIA) based in Tripoli said it filed the suit against the bank in London's High Court. 

The LIA alleged that Société Générale paid about $58 million to a Panamanian-registered company called Leinada Inc. for advisory services.

The services were related to $2.1 billion of derivative trades that the Libyan sovereign wealth fund had entered into with Société Générale between late 2007 and 2009.

In its suit, the LIA is seeking to void the SocGen deals, which had lost roughly half of their value by the time the Libyan revolution began in February 2013.

The LIA alleges that Walid Giahmi, who controlled Leinada and was close to the Gadhafi family, personally benefited from the investments made with the LIA.

Court documents describe the payments to Leinada as bribes, noting that neither Giahmi nor Leinada had any known expertise in financial advising or restructuring, and the payments offered no apparent value for either SocGen or the LIA.

Giahmi's lawyer called the bribery accusations "completely false" when The Wall Street Journal asked him for a comment.

As the WSJ reported in February, Société Générale is one of several investment firms under scrutiny by the U.S. Securities and Exchange Commission and the Justice Department in connection with their business dealings with the LIA.

The SEC and DOJ are investigation whether the firms may have violated U.S. anti-bribery laws by paying intermediaries to help them obtain investments from the Libyan sovereign-wealth fund.

On March 19, hedge-fund manager Och-Ziff Capital Management Group disclosed that the SEC and DOJ are investigating whether it violated the FCPA in its dealings with the LIA.

In an emailed statement to Reuters, a spokesperson from SocGen said the bank "contests the unfounded allegations in the Libyan Investment Authority's complaint."

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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