Libyan Fund Official Had Never Heard of Goldman ‘In My Life’

  • Najah also tells court he had no knowledge of derivatives
  • Libyan fund employee testifies in $1.2 billion London lawsuit

A Libyan official who helped review billion-dollar investments with Goldman Sachs Group Inc. said he had never heard of the bank or the word derivative before joining the country’s $60 billion-dollar sovereign wealth fund in 2007.

Hisham Najah, now the Libyan Investment Authority’s chief investment officer, testified Wednesday in the fund’s lawsuit against Goldman Sachs over losses from trades in 2008.

“At the beginning our only research tool was Google,” Najah, then an analyst in the equities team, said in a witness statement filed in the case. “Before I joined the LIA, I had never heard of Goldman Sachs in my life.”

The Libyan fund’s $1.2 billion lawsuit hinges on how well its employees understood 2008 derivatives trades linked to Citigroup Inc. and other stocks that went on to lose almost all their value. Goldman Sachs says the LIA was sophisticated enough to appreciate the risks, while the Libyan fund argues its inexperienced staff relied on Goldman bankers who abused their position of influence.

Training

Sebastian Howell, a spokesman for Goldman Sachs, declined to comment. In court, the bank’s lawyer Robert Miles alleged that Najah hadn’t remembered events fully, and that the Libyan official had access to analysts’ reports and bank research portals as well as the internet. Miles also pointed out that Goldman had given Najah training on derivatives.

Najah said the equities team would write reports on proposed investments for LIA managers.

Najah also said when he left Chevron Corp., where he was an accountant, for the LIA in 2007, he wasn’t familiar with a number of complex financial products.

“I had not come across the word “derivative” in a finance context and did not know it existed,” Najah said.

The LIA alleges that Goldman wooed its staff with gifts, trips abroad and that a banker hired prostitutes for people with links to the fund. Goldman denies any wrongdoing and says the LIA was the victim of an unforeseen financial crash.

The case is The Libyan Investment Authority v. Goldman Sachs International, case no. HC-2014-000197, High Court of Justice, Chancery Division.

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