There's plenty of problems in finance, but you won't be helping fix any of them by identifying even normal transactions as somehow fraudulent.
* The client came up with the trade idea (the spark seems to have come from Qaddafi himself.)
* It was basically just a call option, not some complicated thing with many bells and whistles
* The clients aren't even claiming they were duped in any way
The problem is not that Kabbaj was lying. It's that he was too charming.
Elsewhere, this sort of thing would be called corruption, specifically bribery of a public employee.
That doesn't mean that internships-for-deals or prostitutes-for-deals is an appropriate thing for a bank employee to be offering.
[1]the picture is somewhat complicated by the legitimate beneficiaries - the Libyan people - having had very little say in who ran their sovereign wealth fund, and the Libyan regime having radically changed since 2007 [2]not only was it less damaging than the equivalent long position in stock would have been with the benefit of hindsight, but other articles suggest the Libyans preferred the derivative option because they were less likely to be subject to asset freezes/seizures if the US government took a more anti-Gaddafi stance in future...