How Libya Blew Billions and Its Best Chance at Democracy

[reorg]

How Libya Blew Billions and Its Best Chance at Democracy
By David Samuels August 07, 2014
BloombergBusinessweek

...

Libya’s economic future, once touted as the brightest in Africa, looks equally bleak. Western news sources around the time of Qaddafi’s death reported that the dictator had stashed tens of billions of dollars away in overseas accounts that the country desperately needed to pay its bills. After the dictator was toppled, the search began for his hidden personal fortune—an El Dorado of imagined gold that was built in part on the confusion between Qaddafi’s personal assets and state-controlled assets such as the LIA. This fortune was estimated in various publications to be from $70 billion to $100 billion and quickly gave rise to a cottage industry in which fortune hunters struck deals with representatives of Libya’s National Transitional Council to locate missing assets in return for 10 percent of the take.

...

While the amounts involved in these cases are large by normal standards, they barely add up to $1 billion—pocket change for the oil-rich dictator and his petro state. “A lot of the smokescreens you are seeing are masking the biggest robbery in the history of humanity,” says Libyan-born Hafed al-Ghwell, a member of the World Bank’s Development Research Group. (Al-Ghwell adds that he doesn’t speak on behalf of the World Bank.) He is talking about the disbursal of state assets under the new country’s leadership, if it could be called that. “I can tell you financially that, in terms of foreign reserves, Libya had close to $125 billion to $130 billion until the end of last year. These numbers are verifiable.”

In addition to the country’s foreign currency reserves, the economist estimates that the LIA has from $55 billion to $60 billion in various portfolios. “They do not know what assets they have,” he says. Tens of billions of dollars, he adds, were invested in hotels, telecommunications companies, and other assets in Africa that may not be traceable. Still, a close reading of the LIA ledgers, which were leaked to a nongovernmental organization and are now available online, reveals that if tales of Qaddafi’s hidden fortune proved to be a myth, the rumors that tens of billions of dollars were looted from Libyan accounts are entirely real. And it didn’t begin with the collapse of the country.

...

Of the nine companies to which the LIA entrusted its $70 billion bankroll, almost all appear to have lost incredible amounts of money while charging sky-high fees. ... the outstanding single offender was Goldman Sachs, which charged $350 million in fees for a series of trades that lost the Libyans 98 percent of their $1.3 billion investment.

...

And if the West relieved Libya of a decent-size share of its national wealth in the years immediately before NATO toppled the dictator, the situation today is even worse. In April 2012, Mohsen Derregia, a research fellow at the University of Nottingham Business School, was appointed chairman and chief executive officer of the LIA following what he describes as “totally a freak accident”—an accident that left him in charge of what, at an estimated $66 billion, was still one of the most valuable investment portfolios on the planet. (That the portfolio remains somewhere near its original value is no triumph in a market that has almost tripled from its low five years ago.) Derregia’s area of academic specialization was accounting, and he knew nothing about finance. On the other hand, he was honest. He was soon forced out of the job and replaced by Ali Mohamed Salem Hibri, the deputy governor of the Central Bank of Libya, which took effective control of the LIA in April 2013. ...

http://www.businessweek.com/articles/2014-08-07/libya-waste-fraud-erase-billions-in-national-wealth

Much more at the link.

[Starry Messenger]

1. K&R

[littlemissmartypants]

2. Kicking. Thank you. nt

[quadrature]

3. the people in 'Libya' don't want democracy

the people of Libya are tribal.
they want their tribe to be
on the winning side.

the people on the losing side often say they
they want democracy, but
that is only for naive people of the
west to believe

[KoKo]

4. Goldman Sachs strikes again.....

Thank you for this article.... quite a read...

[KoKo]

5. Tony Blair and JP Morgan......

After British Prime Minister Tony Blair left office in 2007, he joined JPMorgan Chase’s (JPM) investment banking unit in London and became a frequent visitor to Libya. According to documents made available by the muckraking nonprofit Global Witness, Blair, accompanied by British police, would fly into Tripoli on a Bombardier Challenger 300 jet hired by the elder Qaddafi, where he’d be transported from the airport to the British Embassy and treated like a visiting head of state. He’d stay at the British ambassador’s residence and meet regularly with Seif, who oversaw the activities of the $70 billion LIA, as well as with Seif’s close friend, Mustafa Zarti, the deputy head of the LIA. While Blair has said that his trips to Tripoli didn’t involve doing deals with the LIA, the careful wording of his denials doesn’t contradict the assessment of a senior British diplomat quoted in a Sept. 17, 2011, article in the Sunday Telegraph who described Blair’s visits as devoted to lobbying for J.P. Morgan, the investment banking unit of JPMorgan Chase.

Internal e-mails from J.P. Morgan obtained by Global Witness add some texture and color to the diplomat’s assessment. One e-mail, sent on Dec. 28, 2008, from J.P. Morgan Vice Chairman Lord Renwick to Zarti, then vice chairman of the LIA, said: “On behalf of J.P. Morgan, we would like to invite you to London in the week beginning 12 January to finalise the terms of the mandate concerning Rusal before Mr. Blair’s visit to Tripoli which is scheduled to take place on around 22 January.” Rusal is an aluminum company owned by Oleg Deripaska, a Russian billionaire who was close to Blair adviser and cabinet minister Peter Mandelson; J.P. Morgan was in the running to float Rusal’s shares on the London Stock Exchange, according to the Daily Telegraph’s detailed reporting. Blair made six visits to Libya, none of which is listed on his official website, which regularly publishes the details of his foreign travels.

On April 7, 2009, Blair’s private office wrote to the British Embassy in Tripoli outlining a visit in which he hoped to meet with Qaddafi and Zarti: Rusal would eventually take its initial public offering to Hong Kong, with the LIA buying $300 million of the company shares. J.P. Morgan and the office of Tony Blair did not respond to requests for comment.

In France, a growing scandal led magistrates in April 2013 to open an investigation into the allegation that former President Nicolas Sarkozy accepted tens of millions of euros in Libyan state funds to finance his successful campaign in 2007. It became headline news on June 30, 2014, when police took Sarkozy’s lawyer into custody and held him for 48 hours. Criminal charges have thus far been filed against 10 people, including Sarkozy’s former campaign manager.

Blair’s, Sarkozy’s, and JPMorgan Chase’s efforts to profit from association with the Qaddafis may have been unseemly, but they don’t appear to have violated U.S. law. Other financial institutions may have crossed a legal line: The LIA is suing Goldman Sachs and Société Générale in London, while the U.S. Department of Justice and the Securities and Exchange Commission are investigating several U.S. companies, including hedge fund Och-Ziff Capital Management (OZM) and the asset advisory firm Blackstone Group (BX), for violating the Foreign Corrupt Practices Act. Publicly traded Och-Ziff has warned shareholders that its future results may be affected by the Justice Department’s probe. Goldman Sachs, Och-Ziff, Société Générale, and Blackstone declined to comment.

[adirondacker]

8. Wow! What a depressing racket! Thanks for posting KoKo. nt

[KoKo]

6. Kick...another piece of the puzzle..whever it fits in the puzzle...

but this article is worth a read....long as it is. Tony Blair..JP Morgan, Goldman Sachs...and SO MUCH more. Article could be discounted but the more one reads the links always go back to us becoming more informed about "World Politics." We locals don't matter much anymore unless we frequent "Convenience Stores" and aren't the right color. We could steal 1,000's of dollars of goods from Saks 5th Avenue...and if we are the wife, daughter or relative of a 1%'er...we only do "Community Time" and not SHOT DEAD with multiple shots and left to rot in the sun on a street in a city in the USA...

[reorg]

7. Thanks for the kick

but as edifying as it may be in some parts, the whole story is also very depressing.

Especially in light of what is currently going on there, and such delusional apologies as this one - apparently written by one of new Labour's poodles - which I happened to come across the other day:

Libyan intervention was a success, despite the aftermath's atrocities
No military intervention is ever free of moral hazard. But what Nato did in Libya can hardly be called a 'catastrophic failure'

The new Libyan leadership would find it hard to resist pressure from an international community that has just delivered it to power. The Gaddafi regime, had it remained in place, would have had no similar qualms. It would have continued to enjoy unlimited impunity for the crimes committed in its service.

http://www.theguardian.com/commentisfree/2011/oct/28/intervention-libya-success