Calls Grow for Scrutiny of Family’s Finances

Muammer Gaddafi’s family has built up vast business interests in sectors ranging from oil to hotels during his 41-year rule, giving it a hold over large swathes of Libya’s economy, according to US diplomatic cables and governance groups.

Moammer Gaddafi speaking
Moammer Gaddafi speaking

Anti-corruption activists called on Tuesday for foreign regulators to investigate the ruling clan, which has also overseen heavy investment overseas and have such a grip on their country’s private sector that a US official dubbed them “Gaddafi Incorporated”.

Libya’s current crisis has focused attention on both the huge sums reaped by the regime from oil and the high-profile spending by family members overseas, such as the colonel’s plan to plough €16 million ($21.9 million) into a water bottling plant and hotel spa near the earthquake-stricken Italian town of l’Aquila.

Huguette Labelle, chair of the board of Transparency International, the Berlin-based anti-corruption group, said: “When a ruler is being questioned in this own country in the way Mr Gaddafi is, people need to investigate immediately and freeze any assets they find until that investigation is complete. People have to do their homework – and they have to do it fast.”

A picture of country run as a personal financial fief by Mr Gaddafi and his relatives has emerged from a leaked May 2006 US cable, entitled “Gaddafi Incorporated”, obtained by the website WikiLeaks and seen by the Financial Times.

The Gaddafi family’s business dealings are famously opaque and their status today is unclear, but a US cable of May 2006 cable gives a detailed insight into their varied income streams.

While the colonel “often speaks out publicly against government corruption”, he allows the politically connected elite – and in particular his family – “direct access to lucrative business deals”, the diplomats write.

The family, the cable reports, had “strong interests in the oil and gas sector, telecommunications, infrastructure development, hotels, media distribution, and consumer goods distribution.”

The children also are reported to draw “income streams” from the country’s national oil company and its oil service subsidiaries, which would give them a stake in the industry that dominates the economy and generates export earnings of tens of billions of dollars a year.

Diplomats describe how Seif al-Islam, Col Gaddafi’s second son and heir apparent, had access to oil services through the petroleum subsidiary of his “One-Nine Group”, named after the 1 September 1969 coup in which his father overthrew King Idris.

The Libyan leader’s daughter, Aisha Muammar Gaddafi, had close connections to the energy and construction sectors, alongside financial interests in St James, a private clinic in Tripoli, according to the cable.

Mohammed, the eldest son, controlled the country’s General Post and Telecommunications Committee, and therefore had “major input over any telecom or internet service”.

Saadi Gaddafi, the third son, was planning a “new city” in the west of Libya slated as a major tourist development.

The former professional footballer also, the diplomats write, “keeps busy with his soccer teams, the Olympic Committee and his military career”. He is reported to combine these interests occasionally to use “troops under his control to impact business deals”.

The Gaddafi family’s control over major swathes of Libya’s economy was such that they occasionally fought each other for lucrative opportunities, the cable claims.

In one particularly telling example, it describes a rumoured three-way battle between the colonel’s sons Saadi, Mohammed and Mutassim, over the coveted local Coca-Cola franchise, a “very twisted tale” that “continues to confound local business and diplomatic community attempts to ascertain exactly what interests are in play”.

The colonel, his children nor spokesmen could be reached for comment, and did not respond to requests for comment from the FT on Tuesday.

Anti-corruption experts said the questions being raised over the fate of the country’s large oil riches made the need for a probe into the family’s wealth particularly pressing.

Tim Daniel, a London-based lawyer who has been involved in efforts to recover assets allegedly looted by former regimes in Nigeria, Pakistan and Indonesia, said it would be “very surprising” if the colonel and his family hadn’t built up “considerable wealth” overseas.

“All the classic ingredients are there in Libya – vast oil wealth, a long period of autocratic rule with violence at its heart, and untramelled support for other rogue regimes in Africa,” said Mr Daniel.

“The sources and location of that wealth should be the subject of urgent investigation by overseas governments if there is to be any hope of returning to the Libyan people what is rightfully theirs.”

No effort by any overseas regulator to investigate Gaddafi family assets has surfaced so far.

Swiss authorities, who have frozen assets suspected of links to the regime of Hosni Mubarak, the deposed Egyptian president, said they were following developments in relation to the Gaddafi family “very closely”.

Governance specialists said the way the Gaddafis have run Libya raised questions over whether there was a full and proper separation between the family’s wealth and the Libyan government’s many large investments.

They include a stake in UniCredit, Italy’s largest bank by assets, property in London’s Mayfair, a 3.01 percent stake in Pearson , the owner of the Financial Times, and Juventus, the Italian football club.

Anthea Lawson, a campaigner at Global Witness, a London-based anti-graft group, said: “For a ruling family to have its interests so closely intertwined with those of the state is a massive red flag indicator for corruption.”

Publicised personal foreign investments by the family include the money Mr Gaddafi set aside last year to sink into Antrodoco, a small Italian town at the foot of the Appenines, to thank locals who had greeted him warmly as he headed to the G8 summit hosted in L’Aquila after it was hit by an earthquake.

In its combination of strangeness and largesse, that venture distilled some of the reasons why many observers think the source, size and location of the Gaddafi family’s wealth needs to be examined – whether his regime survives or not.