Read the full article here
Goldman Tries, Fails to Sell Soul With Libya Deal
By Matt Taibbi - Taibblog, Rolling Stone
It was hard not to be amused to see this story by CNBC’s John Carney the other day with the following provocative headline: “Goldman Dodges a Bullet.”
In the story an unnamed Goldman banker told Carney that there was a widespread feeling of relief within the walls of the bank after news broke that Goldman a few years ago offered to sell Moammar Qaddafi a $3.7 billion equity stake in their company. The relief, it seems, stemmed from the fact that the deal was never struck – and therefore Goldman doesn’t have to answer charges now of having funded repression in the Middle East. From the Carney piece:
“The last thing we need right now would be headlines reading ‘Vampire Squid Profits Funding Libyan Dictator,’” one senior Goldman investment banker told NetNet.
I appreciated the shout-out there, but I also had to laugh: only a Goldman, Sachs executive would fail to see that offering to sell yourself to a ruthless anti-Semitic dictator/terror sponsor is just as bad as actually completing the sale. If anything, it’s worse. There is no modern-day Goethe or Faust with the genius to even invent an anti-hero pathetic enough to not only try to sell his soul to the Devil, but fail! But apparently, this shameful episode is what counts as a PR win for the esteemed i-banking King these days:
"Finally, we dodged a bullet," another person at Goldman told Carney.
The Libya episode is classic Goldman. They made the equity offer in the first place after blowing a giant pile of Qaddafi’s money on a complicated series of option bets, made before the 2008 crisis. In this deal they pulled the standard White-God conquistador routine, sending in a smooth-talking "rock star" salesman to dazzle the aborigines with cuckoo clocks and shiny things. From MarketWatch:
Libya was eager to join the big leagues of finance, and its investors were “awed” by an Arabic-speaking Goldman executive who urged them into an options deal that bet on the fortunes of companies including Citigroup Inc. C +0.23% , Allianz DE:ALV -1.33% and Italy’s UniCredit IT:UCG +2.08% .
The LIA, Libya’s sovereign wealth fund, was charmed by the demonstration and decided to go all-in with a $1.5 billion bet. Goldman very quickly lost them 98 percent of that money.
I never knew it was even possible to lose 98 percent of an investment that quickly. If you sent a blind, three-legged donkey into Caesar’s palace with $1.5 billion in chips, it could probably stay solvent longer than this options package Goldman sold to Qaddafi.
How could the Libyans be enticed to take such a crappy deal? See if this sounds familiar: according to the Wall Street Journal, the Libyan fund manager felt that Goldman had "misrepresented" the fantastic investment opportunity Goldman sold to them, and also made trades "without proper authorization."
You can see the video here