Goldman Sachs (NYSE:GS) is denying a front-page WSJ article that claimed the company offered a massive Libyan sovereign wealth fund the opportunity to buy a sizeable Goldman Sachs equity stake.

Goldman Sachs spokesman Lucas Van Praag was quoted in a CNBC report as saying that, "the idea the LIA would take an equity stake in Goldman was never an option."

The report continued: "He did say it is possible that when the company was in the market to raise money, after Warren Buffett invested $5 billion in the firm in September of 2008, the LIA was on the list of investors to call about a $2.5 billion equity offering that followed the Buffett investment, but that Goldman never approached the LIA," according to CNBC.

Van Pragg also noted that the trades that resulted in a massive loss--about 98 percent of a $1.3 billion investment--to the fund were designed and approved by the fund and that Goldman Sachs merely executed them. He noted also that Goldman Sachs offered to restructure the deals as they were tanking.

In hindsight, it's probably a good thing that the investment never took place. Certainly, in light of recent political events, it would have looked bad for the firm to be owned by what the government has deemed a rogue state. Back then, the Libyan government was liberalizing and sanctions had been lifted. So the idea of doing business with the country was not considered taboo at all. No laws seemed to be violated, though it does appear as though the bank was going to unusual lengths to make the fund good on those losses. It certainly doesn't treat all losing clients that way.

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