Wednesday, Sep 07, 2011

(This item was originally published Tuesday.)

By Benoit Faucon

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Libya's sovereign wealth fund may have lost up to $6 billlion, according to a senior official, who pledged he would look into some of those losses incurred in transactions with international financial institutions, including Goldman Sachs Group Inc. (GS).

Mahmoud Badi was named last month to oversee Libya's foreign investments, chiefly the Libya Investment Authority, a $65 billion sovereign fund set up under the regime of Col. Mommar Gadhafi's regime that has since collapsed.

"Losses of the LIA were not less than $3 billion and might go to $6 billion," he told Dow Jones Newswires in an interview Sunday.

He also warned that the recent reinstatement of former Gadhafi officials at the LIA could hinder the process of examining the funds.

His remarks underscore the daunting task faced by the new Libyan government as it starts to tackle the legacy of Gadhafi's 42-year-long regime.

Financial deals signed under Gadhafi are among the business relationships being scrutinized by Libyan officials aligned with the National Transitional Council, who are trying to rebuild the nation's reputation in the international business community. Leaders of the new government authority are working with former bankers and finance experts and have promised greater transparency and accountability.

Badi said he plans to examine transactions with Goldman Sachs and Societe Generale SA (GLE.FR) and will also look into the finances of Tamoil SA, one of Europe's largest refiners, which has the Libyan Investment Authority as one of the largest shareholders, saying he would examine Tamoil's finances to see whether there was any wrongdoing - though he said he has not opened the company's books yet.

He said transactions carried out by Goldman Sachs for the LIA incurred losses of $1.4 billion while deals with Societe Generale lost about $700 million.

"These two institutions [Goldman Sachs and Societe Generale]...I have big questions over them," he said, referring to the losses incurred.

Societe Generale and Goldman Sachs declined to comment to Dow Jones in relation to the losses, and Tamoil officials, when emailed, didn't return a request for comment.

The Wall Street Journal reported Tuesday that Libya was looking into the LIA's dealings with Societe Generale. In addition, it has said the U.S. Securities and Exchange Commission was examining a $50 million payment offered by Goldman Sachs to the LIA for an outside advisory firm. The payment was never made, and Goldman has denied any wrongdoing.

-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@dowjones.com

(Margaret Coker of the Wall Street Journal in Tripoli contributed to this article.)

(END) Dow Jones Newswires

07-09-11 0402GMT