Moral Outrage
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Lockerbie Libyan Oil Money and Goldman Sachs

Most of us probably remember, vaguely, that Libya’s role in the Lockerbie bombing is an established fact. If so, we’re off base.

Let’s start with this 2001 BBC report, following the conviction of Megrahi, a Libyan intelligence officer: “Robert Black, the Scottish law professor who devised the format of the Netherlands-based trial, was quoted on Sunday as saying he was ‘absolutely astounded’ that Al Megrahi had been found guilty. Mr. Black said he believed the prosecution had ‘a very, very weak circumstantial case’ and he was reluctant to believe that Scottish judges would ‘convict anyone, even a Libyan’ on such evidence.”

But in May 2002, Libya offered staggered payments to the Lockerbie victims’ families, as part of a trade for the cancellation of UN and US trade sanctions, and removal of Libya from the State Department’s list of states sponsoring terrorism. By August, 2003, Qaddafi cut a deal, as reported in the New York Times: “Libya and lawyers for families of the victims of the 1988 midair bombing of Pan Am Flight 103 over Lockerbie, Scotland, signed an agreement today to create an account for $2.7 billion in expected compensation, a lawyer said.”

Libya told the UN it “accepted responsibility” in the bombing—though, notably, it did not admit guilt. Indeed, as late as 2008, Qaddafi’s son Saif told a BBC documentary crew that the only reason Libya “admitted responsibility” was to get the sanctions removed. The documentary noted that several victims’ families had declined compensation because they felt Libya had not actually been behind the bombing.

In 2007, strongly encouraged by the UK oil company BP, Britain began pushing for a transfer of Libyan so-called terrorist Megrahi back to prison in Libya, resulting in a series of events that concluded with his 2009 release from incarceration—on purported medical grounds. The same year Megrahi was released, Qaddafi, faced with stiff ongoing Lockerbie payments, began pressing oil companies to pay more to help cover his debt.

Top aides to Col. Muammar el-Qaddafi called together 15 executives from global energy companies operating in Libya’s oil fields and issued an extraordinary demand: Shell out the money for his country’s $1.5 billion bill for its role in the downing of Pan Am Flight 103 and other terrorist attacks. If the companies did not comply, the Libyan officials warned, there would be “serious consequences” for their oil leases, according to a State Department summary of the meeting.

Now why would Qaddafi be desperate for cash? The Wall Street Journal reported: “In early 2008, Libya’s sovereign-wealth fund controlled by Col. Moammar Gadhafi gave $1.3 billion to Goldman Sachs Group to sink into a currency bet and other complicated trades. The investments lost 98% of their value, internal Goldman documents show. Officials at the sovereign-wealth fund accused Goldman of misrepresenting the investment deals and making trades without proper authorization, according to people familiar with the situation.”

Is it any surprise that just as this banking disaster unfolded, Qaddafi in 2009 turned desperately to the Western oil companies, which were doing well by Libya, and wanted them to pay more royalties to fund the Lockerbie settlements? Settlements he perhaps should not have had to pay in the first place?

[Excerpt of article by Russ Baker]


One Response to “Lockerbie Libyan Oil Money and Goldman Sachs”

  1. Goldman Sachs was eager to get its hands on some of the newly available Libyan wealth after international sanctions were lifted against the country in 2004.

    The Libyan Investment Authority (LIA) is a sovereign wealth fund worth tens of billions of dollars, into which the Gaddafi administration poured the money it made from oil sales. After losing Libya’s $1.3 Billion in just a handful of complex trades, it is believed that senior Goldman Sachs officials were then summoned to Tripoli, and were told that the bank would need to offer some sort of compensation.

    Goldman Sachs is understood to still hold at least three different accounts containing LIA money; two in its asset management division and one in foreign exchange, a legacy of the initial $1.3bn.

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