Banker in Middle of Fight Between Goldman Sachs and Libya 

The emergence of Jaber George Jabbour in a battle between Libya’s sovereign wealth fund and Goldman Sachs reveals the complex relationship between banks and public sector entities.

As an analyst at Goldman Sachs, Jaber George Jabbour learned the intricacies of sophisticated financial products by helping to create derivatives bets for big investors like pension funds.

After he was laid off during the financial crisis, he immediately put that knowledge to work advising public sector entities battling investment banks over expensive complex derivative trades that turned sour.
Now his assistance is being sought by Libya’s sovereign wealth fund, which is suing his former employer in London over $1.2 billion in transactions that saddled the fund with huge losses but earned Goldman $350 million.

Mr. Jabbour’s latest incarnation has emerged in documents related to the Libya suit and his work in Portugal. They shine a light on the complex relationship between bankers and public sector entities, a relationship both parties often seek to shield from public view.

For example, in June 2008, while at Goldman, Mr. Jabbour sent an email to a colleague about a big currency options trade the bank had sold to the Libyan Investment Authority. The authority, he said, did not understand the trade, which exposed it to potentially $100 million in losses.

If the Libyan Investment Authority has its way, Mr. Jabbour will also play a role in the suit it has brought against Goldman.
When the official told his boss that the entire investment could be wiped out, his boss responded: “We are not running a casino.”

Mr. Jabbour conveyed that conversation in an email to the banker who was working most closely with the Libyan fund. Mr. Jabbour suggested that the trade be altered to substantially lower the risk.
Goldman restructured the trade, cutting the investment in half while keeping the chances of the authority recovering its initial investment unchanged, documents show.

The currency trade is not part of the Libya suit, but the authority appears to think that Mr. Jabbour’s observations could aid it in its case against the $1.2 billion in transactions it has called into question.

Source: NYT-Banker in Middle of Fight Between Goldman Sachs and Libya

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