Belfast Telegraph

Sunday 21 September 2014

Exodus continues as global net tightens around Gaddafi fortune

Muammar Gaddafi

The international effort to throttle Libya's finances has been stepped up as the US froze the assets of the country's $70bn sovereign wealth fund and several European governments moved to stymie other interests held by the Gaddafi regime.

But there is a growing row in the European Union over the status of the Libyan Investment Authority (LIA), a $70bn fund that acts as an umbrella organisation for a number of Libyan state-owned assets. Several countries, including, significantly, Italy where the LIA has invested heavily, have argued as recently as yesterday that EU and UN orders to freeze the assets of certain Libyans with close links to the Gaddafi regime does not apply to the LIA.

A number of individual countries have already acted. In the UK, about £2bn worth of interests have now been frozen, including interests thought to be held by HSBC, which is understood to act as custodian for the Libyan Investment Authority.

This includes the £1bn of assets thought to be directly linked to Gaddafi and a number of his acolytes that were immediately frozen last week when the EU order was issued. Yesterday, a spokesman for HSBC refused to discuss any connection with Libya: “The bank never comments on its clients' interests. And this is no exception,” he said.

The LIA was established in 2006 after Libya was welcomed back into the international fold and, until the recent violence in Libya, was feted by a number of leading politicians, including Tony Blair and Silvio Berlusconi. Prince Andrew, who acts as a roving trade ambassador for the UK, met Colonel Gaddafi three times |between August 2008 and February 2009 and his son Saif |al-Islam twice. The meeting |between Prince Andrew and Saif in October 2007 took place at Buckingham Palace. The palace yesterday stressed that the meetings were in line with Government policy at the time.

The EU failure to act against the LIA was put into sharper focus on Thursday night when US Treasury Secretary Timothy Geithner said the Americans had seized assets, including those owned by the sovereign wealth fund, worth $32bn. President Barack Obama described the action as the “most rapid and forceful set of |sanctions that have ever been applied internationally”.

Several European administrations responded to President Obama's comments by stepping up their efforts against the Gaddafi regime. In Vienna, the Austrian Central Bank extended the country's freeze list to include Mustafa Zarti. Crucially, Mr Zarti, who holds an Austrian passport and was not on the original EU list, is the deputy head of the LIA.

Officials at the Austrian Central Bank described Mr Zarti as, “a close confidant of the Libyan regime” and his addition to the freeze list came after he was questioned by police over his links to Gaddafi's government.

The move against Mr Zarti — who is known to be a close personal friend of Saif — puts further pressure on Circle Oil, an Irish exploration company that is listed on the London Stock Exchange. Nearly a fifth of Circle's shares are owned by Libya's National Oil Corp, a state-owned division of the LIA. Mr Zarti was until |recently a leading executive at National Oil Corp.

The Irish Department of Finance yesterday said: “The fact that these statutory instruments are not yet in place does not effect the obligation to freeze assets under the EU Regulation.” In response last night, the company said it was, “seeking to comply (with the regulation), following due process and taking legal |advice”.

Last night Gaddafi's forces launched a powerful attack in a bid to recapture a rebel-held city in fierce fighting which left at least 18 people dead.

The casualties of the fighting in Zawiya, the closest opposition-held city to the Libyan capital Tripoli, included the city's top rebel commander — an army colonel who defected.

To the east, rebels advanced on an oil port along the Mediterranean coast in their first offensive against Gaddafi's military.

The fighting underlined how both sides are pushing against the deadlock that has gripped Libya's 18-day-old upheaval.

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