By Sara Farolfi & Stelios Orphanides
Newly leaked records from Cyprus show how a Gaddafi-era procurement official who stole millions from his country’s government used offshore companies and multiple bank accounts to channel and launder the proceeds abroad.
PART ONE
A former head of Libya’s state contracting office who served under the country’s former dictator Muammar Gaddafi is being investigated because he is believed to have stolen 20 percent of the value of the contracts his office handled.
Now, a new document leak reveals that the former official may have used at least 16 bank accounts and seven companies in Cyprus in the alleged crimes. The newly revealed mechanisms form just part of his hidden global empire of more than 100 companies, luxury real estate holdings, and other assets.
From 1989 until 2011, Ali Ibrahim Dabaiba, once mayor of the coastal city of Misrata, controlled the Organization for Development of Administrative Centers (ODAC), a major public agency tasked with developing the country’s infrastructure. During his tenure as its director, Dabaiba awarded 3,091 contracts with a total value of 45.4 billion Libyan dinars (US$ 33 billion). In an interview to the Oxford Business Group, Dabaiba said that ODAC’s budget in 2008 was $6.8 billion.
The Tripoli-based Libyan authorities believe that Dabaiba may have misappropriated between $6 and $7 billion of that amount using such techniques as charging excessive “commissions” and awarding tenders to companies that were linked to him or that he secretly owned outright. In 2013, they launched a criminal investigation into his activities, as well as those of his brother Yusef Ibrahim Dabaiba and his sons Ibrahim Ali Dabaiba and Osama Dabaiba. They have also enlisted international investigators to try to recover the illegally obtained assets, even offering a percentage of the funds as a finder’s reward.
In the run-up to the fall of the Gaddafi regime in 2011, Dabaiba knew a loser when he saw one, and switched his allegiance to the rebels. As Libya descended into a brutal civil war that claimed the lives of thousands of his countrymen, his offshore empire was ready to serve him well for a life in exile. (Dabaiba is now believed to be living in Istanbul.)
Ali Ibrahim Dabaiba, formerly mayor of Misrata and head of major Libyan state procurement agency ODAC under the Gaddafi regime.
The new trove of financial documents leaked to reporters, as well as interviews with Libyan officials investigating Dabaiba and files from that investigation, reveal more about how his schemes worked.
Just some of the Libyan official’s dealings involved Cyprus. But Dabaiba’s use of the country’s financial services is particularly sensitive given its recent efforts to clean up its image as a haven for money launderers and other criminals.
Reporters for the Investigative Reporting Project Italy (IRPI) and an independent reporter working for OCCRP in Cyprus have spent the last six months tracing where some of that missing money may have ended up — and to what purpose.
Public Procurement, Personal Profit
Ali Ibrahim Dabaiba’s rise was as rapid as it was lucrative. Most likely born in 1945, the former geography teacher became mayor of the key coastal city of Misrata not long after Gaddafi seized power in 1969. In 1983, Dabaiba started working at ODAC, going on to serve as its director from 1989 to 2011.
Interpol Red Notice issued for Ali Ibrahim Dabaiba (since retracted). Credit: WayBack Machine Internet Archive ODAC’s purpose was to use some of Libya’s considerable oil wealth to develop the country’s public infrastructure.
As its head, Dabaiba played a decisive role, negotiating contracts and overseeing payments to suppliers. But he also had other loyalties; documents show that while on ODAC’s payroll, he ran several companies abroad that benefited from his leading role at the agency.
Dabaiba’s embezzlement of ODAC funds did not go unnoticed even during Gaddafi’s rule, according to a 2016 book on the Panama Papers leak by two of the journalists who worked on it.
The book notes that an advisor to the dictator told Libyan investigators that discrepancies in ODAC’s bookkeeping had been noticed very early on, but were never explored as Gaddafi and his sons were also involved in the agency’s management.
The country’s new rulers proved less willing to turn a blind eye, and Dabaiba’s fortunes changed. In 2012, along with other Libyans holding allegedly stolen assets, he was blacklisted by the Tripoli-based National Transitional Council, the country’s new governing body.
By this point, Dabaiba had fled Libya.
The authorities requested an Interpol red notice in an attempt to apprehend him on charges of embezzlement of public funds, money laundering, abuse of power and corruption, but the document is no longer in force.
According to a Libyan news site which cited social media, the Interpol warrant led to his arrest in September 2014. (Interpol would not comment on the reason for its withdrawal, referring reporters back to Libyan authorities, who have also not replied to requests for comment.)
Among the documents obtained by reporters are dozens of invoices issued to ODAC by various companies under Dabaiba’s oversight, showing how he either awarded contracts to those he was affiliated with or might have charged commissions of up to 20 percent on government contracts he negotiated.
The leaked files also contain digital records of at least 16 personal bank accounts Dabaiba held in Cyprus with both Cypriot and foreign banks. They show a portfolio of investments worth millions of US dollars, an amount that is hard to square with what Libyan investigators have said was his official ODAC salary — just £12,000 ($15,600) per year.
In total, the Libyan investigators are looking into more than 100 companies around the world related to Dabaiba, including 65 in the UK, 16 in the British Virgin Islands, 22 in Malta, six in India, and three in Liechtenstein.
Libyan authorities have asked law enforcement agencies in all of these jurisdictions for assistance in the investigation.
But it all started in the eastern Mediterranean, in the island nation of Cyprus, where Dabaiba once lived.
Employer and Employee
Cyprus would have been an attractive location for a Libyan official to set up offshore companies while his own country was under UN sanctions for its role in the 1988 Pan Am bombing. After all, the island offered confidentiality in banking services, had no anti-money laundering framework, and enjoyed a low corporate tax rate.
Dabaiba appears to have used at least seven companies on Cyprus, as well as two in Canada and three in Liechtenstein, to invoice ODAC and to move and invest the stolen funds.
Dabaiba either worked for or owned some of these companies, all of which were linked to an old friend of his who proved a useful partner in crime.
A Libyan businessman named Ahmed Lamlum, an old acquaintance who died in 2014, had helped Dabaiba set up and maintain his offshore empire (as well as sharing in the spoils).
The closeness of their relationship is evinced by the trust Dabaiba appears to have placed in his friend. As Lamlum’s chief accountant once wrote in a 2000 letter to his Credit Suisse bank manager, the Libyan held power of attorney to represent Dabaiba “in his bank accounts” at the Swiss bank.
Dabaiba and Lamlum shopped for properties in Switzerland together, working with the same real estate agent to purchase two neighboring flats in Montreux on Lake Geneva and even used the same decorator in 1995.
In addition to their business partnership, the two even developed family ties. In 1998, Dabaiba’s daughter Amna married Lamlum’s nephew Hani Lamlum.
One of the companies the two men made use of together — perhaps the most important in their schemes — is the Cyprus-based Fabulon Investments, later renamed to Global Business Network International.
According to its website, this company today specializes in office equipment, office automation, and stationery. But Fabulon was much more than that, playing a key role in the theft of Libyan state funds from ODAC. In addition to receiving a large portion of the money itself, the company acted as the physical headquarters for some of Dabaiba’s other companies.
Lamlum was registered as Fabulon’s beneficial owner, meaning that the company’s profits ultimately accrued to him, at least on paper. As for Dabaiba’s role, the leaked documents variously refer to him as Fabulon’s employee, its head, and also “the sole signatory for most of the company’s bank accounts in Cyprus, Switzerland and England.” A document relating to Fabulon’s bank account at the Cyprus branch of Hellenic Bank gives Dabaiba’s position as the company’s managing director.
Between August 1997 and September 1998, the company submitted at least nine invoices to the Libyan agency for substantial orders of construction materials and furnishings. The total invoiced amount was in excess of $5.4 million.
In 1994, he claimed to be a business consultant of Nuvest Consultancy, another Cyprus-based company.
It’s not known what proportion of these funds may have found their way into Dabaiba’s personal accounts, or whether he received any kickbacks for the ODAC contracts he steered towards Fabulon. (It is known that, even as he earned £12,000 per year from the Libyan agency, he was also pulling at $90,000 from the company as an annual salary.)
…
To be continued
***
Sara Farolfi is an Italian freelance journalist. She is a member of the Investigative Reporting Project Italy (IRPI).
Stelios Orphanides – Cyprus Mail journalist.
_______________
