Libya's Bankers: Treasury Protected From Plunder

Sep 14, 2011
Originally published on September 14, 2011 3:26 pm

As a new Libyan leadership assesses the country's financial condition, there were fears that ousted leader Moammar Gadhafi, his family and his cronies had looted the treasury.

But it now appears much of that wealth remains frozen in foreign accounts, and Libyan bankers say the billions of dollars worth of gold and cash held by the Central Bank remained basically intact throughout the chaos of the revolution.

One of the many rumors and claims was that a convoy of more than 200 Libyan military vehicles had crossed the border into neighboring Niger.

For a brief time, there was talk of desperate men barreling across the Sahara Desert guarding a dictator's ransom in cash and gold.

That cinematic vision fizzled, though, when the government of Niger announced that only a few vehicles had entered the country, mostly with lower-level military men and officials, who are now being held under house arrest.

Instead, the new head of Libya's Central Bank, Gassem Azzuz, said the government's assets remained in its vaults, despite pressure from Gadhafi loyalists who tried to get their hands on it as the rebels moved closer to Tripoli.

"The banking sector has done quite well and is doing quite well, and is stable and sound, through the great efforts of the young people working in the Central Bank of Libya and the various banks," Azzuz said.

Azzuz told reporters that the Gadhafi regime had sold off about 20 percent of Libya's gold reserves — about 29 tons — in a last-ditch measure to pay the salaries of soldiers and government workers.

But he said the bankers don't believe that money was stolen.

Bankers' Resistance

Arif Alee Nayad, who is part of the Transitional National Council stabilization team, says Gadhafi supporters did put heavy pressure on the central bankers to release gold and cash for more dubious reasons.

He says the bank employees put up all sorts of resistance, "from not showing up, to actually delaying processes, from pretending not to have the keys, to pretending not to have the passports, in order to block transactions that were detrimental to the Libyan people."

The Libyan government's wealth overseas was frozen by international sanctions aimed at the Gadhafi regime, and that money is slowly beginning to trickle back into the country.

Mazin Ramadan is the director of the Temporary Financial Mechanism, a group set up to see that assets coming back to Libya are wisely spent during the transition to an elected government.

Right now, his group is trying to figure out how to spend about $400 million in Libyan government money that was unfrozen by the United States.

Funds Available, With Strings Attached

Ramadan says it must be spent on United Nations humanitarian programs to help Libyan recover from the war.

"Where the U.N. is concerned, it's always two things," he says. One is corruption, he says. He cites the oil-for-food scandal in Iraq, where U.N. officials were accused of taking bribes from Saddam Hussein's government to allow money to be siphoned off from the program.

"And the other part is the overhead," he adds. "It seems that the U.N. can't do anything without really large overhead."

Ramadan says he's negotiating with U.N. officials to assure that the money is really spent where the Libyans think it's most needed.

As to the billions of dollars worth of Libyan assets that are still frozen abroad, Ramadan thinks it could be years before that money is available.

He points out that money frozen during the regime of Philippine President Ferdinand Marcos is tied up in litigation, 25 years after that strongman was ousted.

Meanwhile, there is still speculation that a significant amount of money from the Gadhafi regime was squirreled away where his cronies could get their hands on it.

"As a matter of fact," says Nayad of the Transitional National Council stabilization team, "they had vast amounts of wealth that didn't enter the banking system in the first place."

And where that wealth is now, is anyone's guess.

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