NEW YORK (

TheStreet

) --

Goldman Sachs

(GS) - Get Report

was given $1.3 billion by Libya's sovereign-wealth fund in early 2008 to make currency bets and other trades. But when the investments lost 98% of their value, Goldman, in an effort to make up for the losses, offered Libya the chance to become one of its biggest shareholders,

The Wall Street Journal

reported.

Talks between Goldman and the Libyan Investment Authority fell apart, and nothing more was done about the lost money, the

Journal

reported, citing internal Goldman documents.

Discussions at Goldman on how to salvage the relationship with Libya included Lloyd Blankfein, the company's chairman and CEO, David Viniar, Goldman's finance chief, and Michael Sherwood, Goldman's top executive in Europe, according to documents reviewed by the

Journal

and people involved in the negotiations. All three executives declined to comment for the newspaper.

At one point, Goldman offered the fund, controlled by Col. Moammar Gadhafi, an opportunity to invest $3.7 billion in the securities firm. Between May and July of 2009, Goldman executives made three proposals that would have given Libya $5 billion of preferred shares or unsecured debt in Goldman, according to documents prepared by Goldman for the fund. Each proposal promised a stream of payments that would eventually offset the losses, the

Journal

reported.

-- Written by Joseph Woelfel

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Joseph Woelfel

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