JPMorgan Chase slapped with bribery allegations from Libyan fund

A sign outside the headquarters of JP Morgan Chase & Co in Midtown, Manhattan.

By Anthony Noto – Reporter, New York Business Journal


JPMorgan Chase & Co. has been slapped with bribery allegations.

The Libyan Investment Authority sued the New York-based bank (NYSE: JPM), alleging that it paid more than $6 million in bribes to secure a $200 million bond deal.

According to Bloomberg, citing court documents, JPMorgan’s Bear Stearns allegedly sent payments to businessman Walid Al-Giahmi — a close friend of the Qaddafi regime — to arrange deals in a contract that was deemed a “sham” agreement.

The bank has until next month to submit defense documents in the case, which was filed in April.

The LIA, an oil wealth fund set up under deposed leader Muammar Gaddafi, is pursuing a number of claims against major banks seeking to nullify unprofitable deals that may have been influenced by bribes. Societe Generale paid more than $1.7 billion in settlements and regulators’ fines over allegations the bank paid a bribe to Giahmi to arrange deals.

JPMorgan bought Bear Stearns at the height of the financial crisis in 2008. Gaddafi was killed in October 2011.

Giahmi reportedly had personal connections with the Qaddafi family and regime, including Qaddafi’s son Saif Al Islam.

Bear Stearns raised $200 million for the LIA in five-year notes after the services agreement with Giahmi was signed in July 2007, the report continued. Neither Giahmi nor his firm Lands Co. Ltd. “provided any legitimate services to Bear Stearns,” according to the LIA’s complaint.

Instead, Giahmi bribed and intimidated the fund’s executive director Mustafa Zarti, other LIA executives and the head of an alternative investment team to enter into the bond agreements, the LIA said.

LIA maintains that Bear Stearns didn’t need the structuring services provided by Giahmi’s firm. While Bear Stearns International made a series of payments before the acquisition, JPMorgan Chase Bank paid the remaining $2 million tranche in 2009, according to the lawsuit.




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