--The new
Libyan government is said to be examining the Libya Investment Authority and
its dealings with foreign banks
--But the
man in charge fears his scrutiny could be hindered by the continuing presence
of Gadhafi-era fund managers
--One
rebel leader said the government should create an independent audit commission
with the power to bring fraud charges
By Benoit
Faucon
As the
dust settles in the streets of Tripoli after the fall of longtime Libyan ruler
Col. Moammar Gadhafi, the new government will have much to do to disentangle
itself from the past because many of its officials served during the 42-year
Gadhafi era.
While the
government continuity can be help to stabilize the battle-scarred country,
there are many questions about how Gadhafi's government invested the country's
vast oil wealth. Mahmoud Badi, the person put in charge by the new government
to examine the $65 billionLibya Investment Authority, says he is scrutinizing
dealings with foreign banks, such as Societe Generale SA or Goldman Sachs Group
Inc. The investments undertaken by the French bank on behalf of Libya lost
about $700 million while transactions carried by Goldman Sachs lost $ 1.4
billion. Both banks declined to comment.
"Losses
of the [Investment Authority] were not less than $3 billion and might go to $6
billion," he said recently. The Wall Street Journal previously reported
the U.S. Securities and Exchange Commission was examining a $50 million payment
offered by Goldman Sachs to the Investment Authority for an outside advisory
firm owned by a relative of the head of Libya's state-run oil company. The
payment was never made, and Goldman has denied any wrongdoing.
Badi
fears his scrutiny of such matters could be hindered by the return of old
managers. According to news reports quoting officials in the new government,
Mohamed Layas and Rafik Nayed, who had been named as chairman and chief
executive, respectively, of the Investment Authority under Gadhafi, were reappointed
at the helm of the fund in late August.
That
reported announcement suggests the new government "is trying to stop the
investigation," Badi said. Layas didn't return a call for comment, and
Nayed couldn't be reached.
Badi
isn't the only one to voice concerns. Abdelhamid Eljadi, an anti- corruption
activist for 10 years during the Gadhafi era, called on the new government to
dismiss Layas and Nayed from the investment authority.
Eljadi,
who previously used the nom de guerre Tamer al-Zyat to avoid regime reprisals,
said the government should create an independent audit commission with the
power to bring fraud charges and the authority to restructure the fund.
Eljadi
also expressed fears that the reappointments may indicates some tribalism in
the new government since both Mahmoud Jibril, the de facto prime minister of
the Libyan interim government, and Nayed come from the Warfalah tribe and from
the same area of Zyadat.
Documents
reviewed by The Wall Street Journal show Jibril, who was head of Libya'sNational
Economic Development under Gadhafi, was a member of the board of trustees of
the Investment Authority and that this board was tasked with overseeing its
investments.
Badi
confirmed the information but didn't comment further. An aide to Jibril
couldn't immediately comment and couldn't be reached thereafter.
Former
Investment Authority officials say that Jibril never actually attended a
meeting of the board of trustees.
Eljadi
says he believes that Jibril "should not intervene in any way with the
Investment Authority directly or indirectly...as he was a member of the board
of trustees of the Investment Authority during the era where it lost billions
of dollars."
To be
sure, the end of Col. Gadhafi's regime has opened the door to freedoms
previously unknown to Libyans and brought new talent to government, such as oil
and finance minister and former opponent Ali Tarhoni. Officials have also
defended the reappointments of Layas and Nayed has a way to smooth the
transition for the running of the fund because they are familiar with its
workings.
But
critics say the presence of the current prime minister on the trustees' list,
along with the return of managers who were in charge when the fund was racked
by losses, is a reminder of the struggles Libya faces to fully turn the page.
Says
Eljadi, the reappointments of managers "defy the cause that 50,000 martyrs
died for."
--Margaret
Coker contributed to this article.
(END) Dow Jones Newswires
09-09-11
1640ET
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