Friday, May 27, 2011
Wednesday, May 25, 2011
Leaked document shows location of $53bn of Libyan state assets
- BBC Business Editor Robert Peston's analysis of this story: http://www.bbc.co.uk/news/business-13552364
- Libyan Investment Authority funds as of June 2010 - leaked document : http://www.globalwitness.org/sites/default/files/LIA.pdf
HSBC and Goldman Sachs held $335m of Libyan state oil money
26th May 2011
London and Washington DC: HSBC and Goldman Sachs are among the key western bankers for Colonel Gaddafi’s regime, a 2010 document leaked to Global Witness appears to show. The document details the whereabouts of state oil revenues. However the Libyan people could not know where it was invested or how much it was, because banks have no obligation to disclose state assets they hold. Global Witness is now calling for new laws requiring banks and investment funds to disclose all state funds that they manage.
Global Witness asked both banks to confirm that they held funds for the state-owned Libyan Investment Authority, and whether they still hold them. They both refused, with HSBC citing client confidentiality. Numerous other banks and financial firms are listed including Societe Generale, UniCredit and the Arab Banking Corporation.
“It is completely absurd that banks like HSBC and Goldman Sachs can hide behind customer confidentiality in a case like this. These are state accounts, so the customer is effectively the Libyan people and these banks are withholding vital information from them,” said Charmian Gooch, director of Global Witness.
The Gaddafi family has significant personal control over the state funds invested in the Libyan Investment Authority. According to the Prosecutor of the International Criminal Court, “Gaddafi makes no distinction between his personal assets and the resources of the country.”
On this basis, it is essential for banking regulators to investigate whether these banks have done enough to ensure that state funds have not been diverted to the Gaddafi family’s personal benefit.
Global Witness has been leaked a draft presentation that appears to show the investment position for the Libyan Investment Authority (LIA) as of 30 June 2010, which stood at $53 billion. The information shows the diversity of Libyan assets held by major financial institutions:
* HSBC holds $292.69 million across ten accounts and Goldman Sachs has $43 million in three accounts. The funds are in U.S. dollars, British pounds, Swiss Francs, Euros and Canadian dollars.
* A much larger portion of the LIA’s deposits – $19 billion – are held in Libyan and Middle Eastern banks, including the Central Bank of Libya, the Arab Banking Corporation and the British Arab Commercial Bank.
* Almost $4 billion of the LIA’s funds are held in structured products with banks, hedge funds and private firms such as Societe Generale ($1 billion), JP Morgan ($171 million) and OCH-ZIFF ($329 million).
* The LIA owns billions of dollars of shares in household name companies such as General Electric, BP, Vivendi and Deutsche Telekom.
Global Witness believes there are two actions required from governments, beyond the sanctions that have already been imposed.
The first is that banks and investment houses must be required by law to disclose state funds that they manage. This would cost nothing and would allow citizens to see that state revenue is not being stolen by corrupt leaders. This fits a growing international norm on transparency of national assets. Oil and mining companies are now required, as a condition of listing on the New York Stock Exchange, to disclose payments they make to governments, allowing people of natural-resource rich states to know what their government is earning.
The second is that banking regulators must do a thorough investigation to ensure that banks holding Libya’s state funds have done appropriate checks – known as due diligence – to prevent transfers from state funds to accounts personally controlled by Gaddafi and his cronies.
“We are calling on others with additional information to go public on Libya’s other assets too or to tell us where to find them. It’s the money of the Libyan people and they deserve to know where it is,” said Ms. Gooch.
HSBC said that it had strong anti-money laundering and anti-corruption procedures in place across all of its businesses.
/Ends
Notes to editors:
1.HSBC’s U.S. division is currently under investigation for possible violations of anti-money laundering rules. Media reports have suggested that HSBC may be fined up to $1billion for not doing enough to curb the flow of dirty money.
2.In a dictatorship where one individual, or a small cabal, exercises almost complete power over the state, there is a very thin dividing line between state and personal investments. Funds may look like they belong to the state but are actually under the effective personal control of a ruler who has captured the state.
3.In the report Undue Diligence we revealed how $3 billion of Turkmenistan’s gas income was at Deutsche Bank in Frankfurt under the effective personal control of then-president Niyazov. Deutsche Bank and the German regulator, BaFin, brushed off our concerns saying these were ‘state accounts’. However we had been told by a former chairman of the Central Bank that this money was treated by Niyazov as his ‘personal pocket money’.
4.Global Witness is also calling for:
* national registries that list the ultimate owner or controller of companies and trusts. Corrupt politicians hide their identity, and therefore their assets, behind complex webs of front companies and legal structures. This can make it very difficult for banks, or law enforcement, to find out who actually controls assets.
* if a bank cannot get its senior politician customers to explain their wealth, then it should turn down the money. Senior officials should be able to explain how their assets were earned legitimately, especially if there is a significant difference between their official salary and their actual wealth. If they cannot explain there should be a presumption that that their funds are the proceeds of corruption. This concept of “illicit enrichment” is already recognised in international treaties such as the United Nations and the Inter American conventions against corruption.
5. ICC comment on Gaddafi wealth: http://tinyurl.com/ICCGaddafi
Contacts:
London:
Robert Palmer on +44 (0)20 7492 5860 or +44 (0)7545 645 406
Andrea Pattison on +44 (0)20 7492 5858 or +44 (0)7970 103 083
Oliver Courtney on +44 (0)20 7492 5848 or +44 (0)7815 731 889
Washington: Stefanie Ostfeld on +1 202 621 6674 or +1 202 577 5858
Hong Kong: Gavin Hayman on +44 (0)7843 058756
Tuesday, May 24, 2011
PLANNING FOR POST-WAR LIBYA
Background: This is a commentary issued today on the future of Libya by Foreign Reports Inc. , one of Washington DC's oldest political analysis firms.
May 24, 2011
PLANNING FOR POST-WAR LIBYA
Addressing reporters in London yesterday with her British counterpart, Foreign Secretary William Hague, Secretary of State Hillary Clinton spoke of a “new Libya” that is ready to move forward.
“We do believe that time is working against Qaddafi, that he cannot reestablish control over the country. The opposition has organized a legitimate and credible interim council that is committed to democratic principles. Their military forces are improving. And when Qaddafi inevitably leaves, a new Libya stands ready to move forward,” Secretary Clinton said.
After she spoke, NATO staged its heaviest bombing raids yet against Qaddafi command centers in Tripoli. French Defense Minister Gerard Longuet said France was deploying its Tigre attack helicopters, while British Armed Forces Minister Nick Harvey told the Parliament that the UK was considering committing its Apache helicopters. Opposition MPs complained that these moves amounted to “mission creep” and that the NATO operation is now seeking to overthrow Qaddafi rather than simply protect civilians.
Never Too Early
No one can say how long Qaddafi can last, especially if he is hiding among his Qaddaf al-Dam tribal supporters in the southern desert areas. But it is never too early to begin planning for post-war Libya, both in terms of reconstruction and assisting in the establishment of viable political institutions.
For the Obama Administration, the U.S. experience in Iraq and Afghanistan has contributed to its decision not to play a leading military role in NATO’s Libyan campaign. But certainly the U.S. experience in Iraq became exponentially more difficult and costly than the invasion itself because of a lack of clear post-war planning.
The Obama Administration doesn’t have to do its own intensive post-war planning to make a “new Libya” stand ready to move forward. On the reconstruction side, the institutional expertise on post-war planning resides in the World Bank, established in 1944, originally as the International Bank for Reconstruction and Development for post-war Europe and Japan. The Bank will not advocate a role for itself in Libya, but will take on the task willingly if its shareholders so direct. It played a key role in assisting post-Communist Eastern European countries emerge into functioning market economies.
At some point, even with Qaddafi holed up in some desert redoubt, it is likely that the government structure in Tripoli will collapse from within. The current opposition based in Benghazi is likely then to have a legitimate claim to govern the vast majority of Libyan territory and population and thus qualify as the legitimate successor government, entitled to control the assets of the Qaddafi government which have been frozen in the U.S. and elsewhere.
Financial Resources
The U.S. has frozen some $33 billion in Libyan assets, out of a world-wide total estimated as high as $165 billion. Custody of that amount of money would challenge the integrity of any new, fledgling government. The World Bank has handled many a fund of that size with an enviable record of integrity and efficiency.
The UN’s History in Libya
When the U.S., Britain, and France took over control of the Italian colony of Libya after routing Rommel’s army in 1943 as occupying powers, they turned to the United Nations in the post-war period to work with a large swathe of prominent Libyans to form a new constitution, which was eventually hammered out before Libya became an independent state at the end of 1951 under a UN Resolution.
Unless there is a role for the UN as an impartial mediator and as an advocate for the creation of new and stable political institutions, the baser forms of human nature may well be at work among the various leaders of the current Transitional Council as they jostle for personal power. It may be popular in some quarters to malign the UN and its bureaucracy, but helping a fledgling government set up lasting and judiciously-framed institutions is one thing it does know how to do, without the inherently mercantile instincts of individual EU states who might seek to stake a claim to “mentor” the new Libya in proportion to their contribution to the NATO campaign.
Regional Side-Effects
One ancillary benefit of getting post-war Libya right, rather than wrong, is the beneficial effect success would bring to its Tunisian and Egyptian neighbors—two countries suffering from widespread unemployment. Before fighting broke out in February, there were more than 1.5 million Egyptian workers in Libya. U.S. proposals for debt forgiveness for Egypt or incentives for private investment there will not come close to making a significant difference for Egypt’s now thoroughly endangered economy; job opportunities, new exports and commercial contacts for Egyptians in Libya would.
The perils of getting post-war Libya wrong abound, with the most extreme case of Libya becoming a failed state like Somalia on the Mediterranean.
Getting post-war Libya right will not be rocket science. In their darkest hours, opposition leaders found true friends in the GCC and in the U.S. Qatar has been their most outspoken champion. When they asked Kuwait for a loan of $300 million, they were given a $500 million grant. Saudi Arabia used its clout in the Arab League to make the NATO mission politically possible. The UAE has been stalwart.
The institutional frameworks that the World Bank and the UN can provide to the “new Libya” exist and are ready to be tapped. All it will take is some prudent post-war planning.
May 24, 2011
PLANNING FOR POST-WAR LIBYA
Addressing reporters in London yesterday with her British counterpart, Foreign Secretary William Hague, Secretary of State Hillary Clinton spoke of a “new Libya” that is ready to move forward.
“We do believe that time is working against Qaddafi, that he cannot reestablish control over the country. The opposition has organized a legitimate and credible interim council that is committed to democratic principles. Their military forces are improving. And when Qaddafi inevitably leaves, a new Libya stands ready to move forward,” Secretary Clinton said.
After she spoke, NATO staged its heaviest bombing raids yet against Qaddafi command centers in Tripoli. French Defense Minister Gerard Longuet said France was deploying its Tigre attack helicopters, while British Armed Forces Minister Nick Harvey told the Parliament that the UK was considering committing its Apache helicopters. Opposition MPs complained that these moves amounted to “mission creep” and that the NATO operation is now seeking to overthrow Qaddafi rather than simply protect civilians.
Never Too Early
No one can say how long Qaddafi can last, especially if he is hiding among his Qaddaf al-Dam tribal supporters in the southern desert areas. But it is never too early to begin planning for post-war Libya, both in terms of reconstruction and assisting in the establishment of viable political institutions.
For the Obama Administration, the U.S. experience in Iraq and Afghanistan has contributed to its decision not to play a leading military role in NATO’s Libyan campaign. But certainly the U.S. experience in Iraq became exponentially more difficult and costly than the invasion itself because of a lack of clear post-war planning.
The Obama Administration doesn’t have to do its own intensive post-war planning to make a “new Libya” stand ready to move forward. On the reconstruction side, the institutional expertise on post-war planning resides in the World Bank, established in 1944, originally as the International Bank for Reconstruction and Development for post-war Europe and Japan. The Bank will not advocate a role for itself in Libya, but will take on the task willingly if its shareholders so direct. It played a key role in assisting post-Communist Eastern European countries emerge into functioning market economies.
At some point, even with Qaddafi holed up in some desert redoubt, it is likely that the government structure in Tripoli will collapse from within. The current opposition based in Benghazi is likely then to have a legitimate claim to govern the vast majority of Libyan territory and population and thus qualify as the legitimate successor government, entitled to control the assets of the Qaddafi government which have been frozen in the U.S. and elsewhere.
Financial Resources
The U.S. has frozen some $33 billion in Libyan assets, out of a world-wide total estimated as high as $165 billion. Custody of that amount of money would challenge the integrity of any new, fledgling government. The World Bank has handled many a fund of that size with an enviable record of integrity and efficiency.
The UN’s History in Libya
When the U.S., Britain, and France took over control of the Italian colony of Libya after routing Rommel’s army in 1943 as occupying powers, they turned to the United Nations in the post-war period to work with a large swathe of prominent Libyans to form a new constitution, which was eventually hammered out before Libya became an independent state at the end of 1951 under a UN Resolution.
Unless there is a role for the UN as an impartial mediator and as an advocate for the creation of new and stable political institutions, the baser forms of human nature may well be at work among the various leaders of the current Transitional Council as they jostle for personal power. It may be popular in some quarters to malign the UN and its bureaucracy, but helping a fledgling government set up lasting and judiciously-framed institutions is one thing it does know how to do, without the inherently mercantile instincts of individual EU states who might seek to stake a claim to “mentor” the new Libya in proportion to their contribution to the NATO campaign.
Regional Side-Effects
One ancillary benefit of getting post-war Libya right, rather than wrong, is the beneficial effect success would bring to its Tunisian and Egyptian neighbors—two countries suffering from widespread unemployment. Before fighting broke out in February, there were more than 1.5 million Egyptian workers in Libya. U.S. proposals for debt forgiveness for Egypt or incentives for private investment there will not come close to making a significant difference for Egypt’s now thoroughly endangered economy; job opportunities, new exports and commercial contacts for Egyptians in Libya would.
The perils of getting post-war Libya wrong abound, with the most extreme case of Libya becoming a failed state like Somalia on the Mediterranean.
Getting post-war Libya right will not be rocket science. In their darkest hours, opposition leaders found true friends in the GCC and in the U.S. Qatar has been their most outspoken champion. When they asked Kuwait for a loan of $300 million, they were given a $500 million grant. Saudi Arabia used its clout in the Arab League to make the NATO mission politically possible. The UAE has been stalwart.
The institutional frameworks that the World Bank and the UN can provide to the “new Libya” exist and are ready to be tapped. All it will take is some prudent post-war planning.
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