The Libyan sovereign wealth fund is investigating investment losses of $1.75 billion on structured products managed by Goldman Sachs and Societe Generale to see whether it can claim compensation, the fund's chairman said on Wednesday.
Mohsen Derregia, chairman of the Libyan Investment Authority (LIA), told reporters in Milan that the LIA needed to review these investments and how they were managed.
“These were investments made in 2007 to 2008, and some of those losses are quite surprising. We've had losses for around $1.75 billion, of which $900 million was on a single investment with Goldman Sachs,” Derregia said.
“We will have to see how these structured products were created, valued and managed. Then we will talk to the investment houses and see if we can claim a refund.”
Asked what kind of structured products were involved, Derregia said: “It's not clear to me.”
Goldman Sachs declined to comment and Societe Generale could not immediately be reached for comment.
Derregia was appointed head of the LIA in April and is sifting through tens of billions of dollars in holdings and investments made by the fund worldwide during the regime of Muammar Gaddafi, which was overthrown last year.
“To have a clear oversight of everything will take time; it won't be done in one or two months,” Derregia said. “Clearly, there will have to be some write-offs, although they are not huge.”
The total value of assets managed by the LIA (about $60 billion) had fallen by less than the LIA feared, Derregia added. “It's now midway between $50 billion and $60 billion. People in Libya feared we had lost 50 percent of our assets. It's not like that.”
Derregia was in Italy to speak to authorities and the financial community about the LIA's holdings in the country, which were seized in March by Italian financial police on the grounds that they belonged to members of the Gaddafi family.
The holdings, worth about 1.1 billion euros ($1.39 billion), include stakes in Italy's largest bank by assets, UniCredit , the oil and gas giant Eni and carmaker Fiat .
The LIA has appealed against the seizure, saying that those holdings belong to the LIA, held on behalf of the Libyan government. Derregia and his lawyers said this view was backed by the Italian economy ministry's Committee of Financial Security, which he met on Tuesday.
The next hearing in the case is on July 12.
Derregia said that the LIA would keep its 1.8 percent stake in UniCredit and could buy more shares in the bank if this was in its own interest.
He said it would not make sense to sell down its Italian portfolio now, given current market conditions. “Clearly the value of the shares has declined substantially. There is no incentive for us to sell the shares now or in the foreseeable future.”
Asked whether the fund would buy Italian government bonds battered by the euro zone debt crisis, he said: “We hold a lot of assets denominated in euros, and we already have enough bonds.” - Reuters