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The Wall Street Journal, building on an earlier report that Goldman Sachs lost 98 percent of Libya's $1.3 billion investment with the firm during the credit crisis, has a new scoop today: U.S. securities regulators are exploring whether Goldman violated bribery laws while doing business with the sovereign wealth fund controlled by Muammar Qaddafi. They're focusing primarily on a $50 million fee that Goldman offered to pay the Libyan Investment Authority as part of its effort to compensate Libya for its steep financial losses. The fee--mentioned in the second-to-last paragraph of the Journal's initial article--would have been passed along to an outside fund adviser run at the time by the the son-in-law of the head of Libya's state-owned oil company.

The transaction never occurred, the Journal explains, but Goldman may have still breached the Foreign Corrupt Practices Act, which "bans U.S. companies from offering or paying bribes to foreign government officials or employees of state-owned companies," including sovereign wealth funds. To its credit, Goldman did say it would make the payment if the deal satisfied "Foreign Corrupt Practices Act representations as set out in the Terms Letter," according to documents reviewed by the Journal. Goldman, not surprisingly, denies any violation, and the Securities and Exchange Commission hasn't yet launched a formal investigation. The Journal adds that other financial firms who used middlemen in their dealings with Libya could also be in trouble.

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