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Libya scrambles to acquire Gadhafi clan's assets.

Summary: For Libyans there was a welcome change last month when the country's national bank started to circulate new notes, replacing the image of toppled autocrat Moammar Gadhafi on Libya's money with scenes of revolutionary triumph.

TRIPOLI: For Libyans there was a welcome change last month when the country's national bank started to circulate new notes, replacing the image of toppled autocrat Moammar Gadhafi on Libya's money with scenes of revolutionary triumph, a Benghazi lighthouse and a mosque.

Collecting pre-uprising Libyan bank notes is proving easier than efforts in retrieving other Gadhafi money -- the cash and assets the Gadhafi clan stashed overseas -- according to asset recovery experts working with Libyan authorities.

Estimates of the lucre range from $60 billion to $200 billion, depending on whether you count state funds and "Gadhafi-owned" assets, says a U.S. recovery investigator working with the Libyan Central Bank. "Gadhafi and his family blurred the line between private and public money and spent four decades building a global business empire."

So far about $9 billion worth of Libyan state assets held overseas have been returned to Libyan government control, according to Victor Comras, a former U.S. career diplomat who worked latterly for the United Nations, advising on economic sanctions, money laundering and terrorism financing.

As with the personal assets -- often corruptly acquired -- of other fallen autocrats, such as Egypt's Hosni Mubarak and Tunisia's Zine al-Abidine Ben Ali, the treasure hunters are facing major obstacles as they seek to identify assets and determine who has ownership of them. Navigating complex laws in different legal jurisdictions adds to the complexity.

And the assets can't always be traced directly to the family: They include shares, bonds and derivatives controlled by trusted aides or by front companies in offshore tax havens.

The slow going was always to be expected, says Comras, now special counsel at the Washington D.C.-based Eren law firm.

"There's always a certain amount you can get quickly -- funds that are obvious and open, like sovereign wealth funds and other funds whose ownership is overt and held in banks in countries that are cooperative. The easy money has been found; the rest is real difficult to recover.

"A certain amount will have been pilfered already. There is a pattern that dictators follow. There is a lot of secret, covert money -- money that they can use while in power and as a security blanket in case anything happens to them. That money is held in other people's name. Once the dictator has gone the temptation is there," he adds.

According to a former Libyan diplomat, there's a scramble already under way to try to block looting closer to home. The diplomat, who has fears about his personal safety and spoke on condition of anonymity, says he informed his superiors several months ago about large money transfers made through the Libyan Embassy by Gadhafi family members and especially one of the autocrat's sons, Moatassem-Billah Gadhafi, to bank accounts in Malta in the early weeks of the uprising.

"I reported the transfers -- I had documents detailing them -- but was warned by my superiors to keep quiet, say nothing," he says.

He also claims funds were transferred to accounts in Italy, again with the assistance of Libyan diplomats in Rome. He and other Libyan government sources say there is a probe under way now of the Libyan Foreign Ministry, which still contains Gadhafi-era holdovers, to see if any overseas assets have been pilfered.

Last March, following a request from the International Criminal Court, Italian authorities seized more than $1.5 billion in assets controlled by the Gadhafi family, including a stake in Italy's biggest bank, UniCredit, worth $814 million, stock valued at $53 million in aerospace and defense giant Finmeccanica and $71 million-worth of shares in car-maker Fiat.

Police seized also stock in the football club Juventus where one of Gadhafi's sons Sdi, who's in hiding in Niger, was once on the board.

Freezing or seizing assets is one thing but disentangling ownership interests and returning control to the new Libyan authorities is another. It took months for Libya to recover last year a $15 million luxury residence in the up-market London suburb of Hampstead owned by Sdi. The property was bought with diverted Libyan state funds via an offshore company in the British Virgin Islands and was returned to the Libyan government after a High Court action in London.

That case is "the only successful asset recovery case brought by a country involved in the Arab Spring," according to Rosie Sharp of the London-based NGO Global Witness.

She believes that Western governments need to redouble their efforts in searching out the "personal assets belonging to regime figures" that were corruptly acquired.

"In 2011, 140 governments acknowledged systemic failures in the controls that should stop banks taking dictators' money. The resolution, initiated by Egypt and passed at a U.N. anti-corruption conference, also agreed more action was needed to help claw back stolen funds," she adds.

In 2011 during the uprising against Gadhafi the U.S. froze regime assets valued at more than $30 billion, the United Kingdom $20 billion and Germany $9 billion. Most of those funds were clear Libyan state funds.

"We just don't know the true scale," of the assets out there, says Comras. "People have this image that it is just cash sitting in banks but it is the form of everything from shares to bonds, derivatives to corporate investments."

The Libyans are being helped in their global hunt by financial authorities in Western capitals and by American law firms, including DLA Piper, and forensic accountants working with several U.S. companies, including the Cohen Group, a Washington D.C.-based global business consultancy founded by former U.S. Defense Secretary William Cohen.

Financial authorities overseas even in sympathetic countries can't do much to help and assist in more passive ways, normally by sending circular notes to financial institutions asking them to conduct due diligence and ascertain whether they hold any Libyan connected assets.

With a host of pressing political and security challenges facing Libya and with a bureaucracy not geared to cope with such a complex task as recovering billions of dollars in assets the process at times has stalled. The maze of laws the Libyans have to steer through on a country-by-country basis to repatriate misappropriated assets adds to the difficulties.

Copyright 2013, The Daily Star. All rights reserved.

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Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:6LIBY
Date:Mar 20, 2013
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