By Agathe Duparc, Montse Ferrer & Antoine Harari
In Libya, a country that has been torn apart and bled dry since the fall of Gaddafi, international criminal networks with connections to Europe and Switzerland make big profits through fuel smuggling.
Public Eye and TRIAL International uncovered business transactions in 2014 and 2015 between the Swiss trader Kolmar Group AG and a smuggling network whose main players are now facing trial in Sicily. This is the story of a long-running investigation in Switzerland, Malta and Sicily.
A Libyan hell in a smuggler’s paradise
Imagine a giant supermarket filled with illicit goods, where militia armed to the teeth and backed by transnational criminal groups and corrupt politicians go shopping.
There is the sinister migrant smuggling ‘aisle’, as well as other aisles for traffic of weapons, vehicles or foodstuffs.
Everyone is rushing to get their slice of the cake in one of the most booming sectors: the traffic of subsidised petroleum products, primarily gasoil imported into Libya and then diverted from local refineries.
Since the fall of Gaddafi in 2011, Libya has not had a moment’s rest. The country is divided: in the west, Fayez al-Sarraj’s Tripoli-based Government of National Accord (GNA) is the only executive body recognised by the international community. In the east, based out of Benghazi, General Khalifa Haftar’s forces control the Libyan National Army (LNA).
They are openly backed by Saudi Arabia, Egypt and the United Arab Emirates, and covertly supported by Russia and France.
In April 2019, Haftar launched an offensive on Tripoli, sending the peace accords signed in late 2015 up in flames. Since then, his men occupy the south of the capital and have seized control over Sirte.
Military clashes and drone strikes happen on a daily basis. On 8 January the two parties accepted what appears to be a very fragile truce under pressure from Russia and Turkey, who openly supply weapons to the GNA.
However, an international summit held in Berlin on 19 January resulted only in declarations of intent. Negotiations are ongoing in Geneva.
To date, the civil war has claimed 11,000 victims and more than 400,000 people have been internally displaced.
Black Gold – the heart of the conflict
The fratricidal conflict ultimately boils down to control over the country’s oil resources.
Libya has the largest oil reserves in Africa, with production levels at over a million barrels per day in 2019, down from 1.7 million barrels under the Gaddafi regime.
The National Oil Corporation (NOC), Libya’s national oil company and once a single entity, has suffered serious territorial challenges. Today, two rival entities oppose each other.
First is the Tripoli-based ‘western’ NOC, which is supported by the UN and the international community and is the only institution authorised to sign export contracts of Libyan crude oil.
It also has a monopoly on the import and export of petroleum products.
Secondly, the ‘eastern’ NOC is based in Benghazi, the region where 80% of Libya’s oil fields are located. It regularly attempts to export crude oil without authorisation from Tripoli in order to fund arms purchases for General Haftar’s troops.
Since 2014, the UN Security Council has done everything in its power to prevent illegal sales of crude oil – yet the smuggling of refined petroleum products has continued to thrive.
Since 2011, as the conflict has significantly reduced the country’s refining capacity, Libya has been forced to import fuel every year.
Between 2013 and 2017, the state spent the colossal sum of USD 23.5 billion on imported petroleum products.
To provide the population with fuel at affordable prices, it is massively subsidised by the central bank. According to the Libyan Audit Bureau, the central bank spent USD 30 billion in subsidies between 2012 and 2017.
The situation has been a boon for smugglers who are able to make generous margins by reselling very cheap products abroad.
Hard Hit on the Population
Smuggling has disastrous consequences for the population. Every day, long queues form at petrol stations.
In hospitals, the lack of fuel to run generators has led to the death of patients and new-born babies.
And in the cold months of winter, the use of defective charcoal stoves has led to the suffocation of families. Electricity cuts are constant.
An “international buyer” based in Zug
It is 18 April 2018. An international summit on combatting the theft of oil and refined products is held at a large hotel in Geneva.
A small man with a trimmed beard addresses the conference from a stage – it is Mustafa Sanalla, the chairman of the Tripoli-based NOC.
Since his appointment in 2014, the straight-talking, high-level, Libyan civil servant has taken every opportunity to denounce the scourge of fuel smuggling, which, in his words, “is bleeding the Libyan economy and prolonging the armed conflict.”
Mustafa Sanalla is heated: “It gives me no pleasure to be here as the representative of a country where fuel smuggling is so prevalent, and where fuel smugglers are able to grow fabulously rich at the expense of ordinary law-abiding Libyan citizens”, he says to a sea of suited-and-booted experts, listing figures designed to prey on people’s consciences.
He estimates that between 30 and 40 percent of the annual fuel imported or refined in Libya every year is either stolen or re-sold as contraband in Libya’s neighbouring countries or Europe.
According to Sanalla, this represents an annual revenue loss of USD 750 million from state coffers.
“If there is no international buyer for Libyan fuel, there can be no smuggling.”Mustafa Sanalla, Chairman of the Tripoli-based NOC, in April 2018 in Geneva.
“Imagine what could be achieved to improve the lives of ordinary Libyans with such a huge sum – hospitals, medication, schools, housing”, urges Sanalla.
He stresses a crucial point: “Remember, if there is no international buyer for Libyan fuel, there can be no smuggling.”
A lengthy investigation
Public Eye and TRIAL International spent over a year investigating in Switzerland, Malta and Sicily.
We discovered that one of these “international buyers” is in fact a Swiss company – Kolmar Group AG – a large fuel and biofuels trader incorporated in Zug in 1997, where it has its headquarters.
According to our findings, Kolmar received over 20 shipments of marine gasoil from Libya between the spring of 2014 and the summer of 2015.
The company was supplied by a network of questionable individuals: Fahmi Ben Khalifa – alias ‘Fahmi Slim’ – previously condemned of drug trafficking in Libya, and his partners Darren and Gordon Debono, two Maltese businessmen.
The gasoil was delivered to storage units rented in Malta by the Swiss company.
In March 2016, the UN panel of experts on Libya identified Fahmi Ben Khalifa as the head of one of the most active fuel smuggling cartels in Libya.
In the autumn of 2017, Catania’s Guardia di Finanza – a Sicilian police branch under Italy’s Ministry of Economy and Finance – managed to dismantle the network in its entirety.
Libyan, Maltese and Italian nationals stand accused: Fahmi Ben Khalifa, Darren and Gordon Debono and seven other individuals have been charged with ‘transnational conspiracy to launder gasoil of illicit origin and fraud’.
Their trial, which started in autumn 2018, is still ongoing in Syracuse, Sicily; the verdict is due to be announced in 2020.
The accused face sentences of up to 20 years in prison.
To date, Kolmar has not been brought into the case, despite the information brought to light by the Sicilian police.
The Italian investigation is undoubtedly the most ambitious police operation carried out in the Mediterranean in recent years. It could easily be turned into a new James Bond film.
Agathe Duparc is a journalist for Le Monde.
Montse Ferreris a Senior Legal Advisor and Investigator of the International Investigation and Litigation (IIL) program of TRIAL International.
Antoine Harari – Swiss freelance investigative journalist based between Geneva and Palermo.
PUBLIC EYE For around fifty years, the Swiss NGO Public Eye has offered a critical analysis of the impact that Switzerland, and its companies, has on poorer countries. Through research, advocacy and campaigning, Public Ey world. With a strong support of some 25,000 members, Public Eye focuses on global justice.
TRIAL INTERNATIONAL is a non-governmental organization fighting impunity for international crimes and supporting victims in their quest for justice. TRIAL International takes an innovative approach to the law, paving the way to justice for survivors of unspeakable sufferings. The organization provides legal assistance, litigates cases, develops local capacity and pushes the human rights agenda forward.