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Published: 03 June, 2011, 16:42
Edited: 04 June, 2011, 03:59

The civil war in Libya and the West’s declaration of Muammar Gaddafi an illegitimate leader is good news for financial institutions that borrowed money from the Libyan Investment Authority (LIA) and invested it with disastrous results.

Earlier several media, including The Financial Times and the Wall Street Journal, reported on how poorly the institutions had dealt with the Libyan assets.

Goldman Sachs was reportedly entrusted with $1.3 billion and managed to turn it into $25.1 million, or a mere two per cent of the original sum, through poor management. Settlement of the conflict was never finalized.

Societe Generale did a little better, wasting just 72 per cent of the LIA’s investment. The French bank convinced the LIA to buy its own shares for some $1 billion a month after the actions of the rogue trader Jerome Kerviel led to a 5 billion-euro loss. After the scandal, SocGen’s shares plunged.

After the civil war erupted in Libya, all the national assets in foreign banks were frozen. Washington said the money will eventually go to the rebels.

According to RT’s financial expert Max Keiser, what happened to Muammar Gaddafi’s funds is just another example of banking terrorism.

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