The extraordinary story of Libya’s overseas investments and seemingly endless battle over their control

Tim Eaton


 The asset freeze and the rest of the iceberg

Back in 2011, following protests in Libya, the international community was quick to freeze assets it deemed could be used to fund the Gaddafi regime’s military campaign. UN Security Council Resolution 1970, passed on 28 February 2011, announced an asset freeze on specific members of the Gaddafi family.

This was then expanded in March to include designated assets and resources controlled by the Libyan authorities in Resolution 1973.

These assets and resources were the LIA, LAIP, and LAFICO, along with those of the Central Bank of Libya and the Libyan Foreign Bank.  The freeze on the latter two was quickly lifted but the freeze on the LIA, LAIP, and LAFICO remains in place. In September 2011, Resolution 2009  eased the terms of the asset freeze so that only assets outside of Libya as on 16 September 2011 remain frozen.

The asset freeze has been an effective means of safeguarding the wealth of the Libyan people but it is not well understood in policy circles, with some assuming it amounts to a blanket freeze. Two main issues have arisen – first, the freeze targets some LIA assets but not others and with no clear reasoning, meaning many of the LIA’s subsidiaries, and the subsidiaries of those subsidiaries did not have their accounts frozen. Second, application of the freeze was uneven – and at times non-existent – in some jurisdictions which meant significant transfers of interest and dividends continued to be made.

Issue one: Subsidiaries

Subsidiaries illustrate the oddities of the terms of the freeze. For example, the LAIP is listed on the freeze but its subsidiaries, OilLibya (now known as Ola Energy), the Libyan Arab African Investment Company, and LAP Mauritius are not. This matters because the UN Panel of Experts, citing LIA internal sources, reported in 2013 that the ‘opaque nature of the ownership structure of the subsidiary hierarchy [of the LIA] was also a deliberate move by the former regime to facilitate the laundering of funds embezzled from the State to personal assets abroad’.

While overall valuations of the LIA’s assets are hard to reach, a large proportion of them are held within subsidiaries, some as tangible assets such as buildings but others as liquid assets – which make them a focal point for competition for control and a potential source of funding.  The plight of LAP Green Networks, a subsidiary of LAP Mauritius, illustrates how management failures at within subsidiaries continued after 2011 despite the asset freeze.

By 2012, LAP Green Networks had invested more than $1bn in telecoms in six African states but was performing poorly. In October 2015, Hassan Bouhadi announced the ‘strategic consolidation’ of LAP Green Networks’ own subsidiaries within the Libyan Post, Telecommunications and Information Technology Company (LPTIC), thereby transferring the assets out of the LIA. He justified the move on the basis it would consolidate telecommunications holdings under one specialized management team.

Bouhadi says he believes LAP Green Networks would have gone into administration had LPTIC not taken over its assets. But the move does raise questions: why should Libya’s state-owned telecommunications company be directly running telecommunications agencies in other states? Questions over due process also arise.  LPTIC says that the consolidation of LAP Green Networks into LPTIC was authorised by eastern authorities. 

Yet a search on the corporate register in Mauritius in November 2020 indicated LAIP remains the owner of LAP Mauritius (which had been the holding company for LAP Green Networks). A search on the Dubai commercial registry indicated LAP Green Networks Dubai changed its name to LPTIC International Ltd, but not until January 2017 – some time after the supposed transfer of LAP Green Networks from LAIP to LPTIC. 

LAP Green Networks is currently embroiled in a legal battle over its holdings. In 2012, Zambia nationalized Zamtel, 75 per cent owned by LAP Green Networks, allegedly without compensation, and the LIA claimed Zambia had sought to exploit instability in Libya to obtain the company. A UK court did order Zambia to repay $380 million in 2017, but – as of 2018 – LAP Green Networks said Zambia had yet to do so.54 Receipt of these funds would be a significant influx of cash for, presumably, LPTIC.

The LAP Green Networks example illustrates how the LIA’s large unfrozen subsidiaries continue to function with limited clarity over their operating procedures and almost no public disclosures.

Issue two: Interpretations of the terms of the asset freeze

Differing interpretations of the asset freeze’s terms when processing payments for supposedly frozen LIA accounts came to the fore during the ongoing investigation into transactions involving the Belgian bank Euroclear. LIA and LAFICO accounts in Euroclear were frozen in 2011 but the bank separated interest and other proceeds such as coupons and dividends from that point onwards, and these were made available to the LIA.

Documents provided by Euroclear to a Belgian parliamentary inquiry into the issue reportedly disclosed that €2.067 billion were transferred from Euroclear to LIA and LAFICO accounts in Luxembourg and Bahrain between 2011 and 2017, leading to important unanswered questions over what has happened to the funds. The UN Sanctions Committee believes such payments should have been subject to the freeze as per the provisions of UN Security Council Resolutions 1970, 1973, and 2009.

But the Euroclear case also raises serious wider questions for the international community over how major financial institutions operating in European jurisdictions could adopt divergent interpretations of the asset freeze for seven years resulting in significant flows of cash.

It is also notable that the change in policy from Euroclear did not come from any internal review process or regulatory decision but was a result of the process unleashed by evidence uncovered as part of the attempts by Prince Laurent of Belgium to recover funds he claimed were owed to him by Libya.

Back to the Future

The creation of the Government of National Accord (GNA) following UN-mediated peace efforts in December 2015 was intended to reunify Libya’s governing institutions, but it has failed. Bouhadi says he met with the GNA’s prime minister Fayez al-Serraj and invited him to appoint a new LIA chair and CEO, but no decision came. Bouhadi came under pressure from the eastern-based authorities who do not accept the legitimacy of the GNA and decided to resign in August 2016. 

Serraj moved to appoint Ali Mahmoud as the new LIA chair and CEO while the eastern-based authorities appointed their own replacement. This left the LIA with three rival claimants to its throne – one associated with the eastern authorities, Breish who was appointed by the former Zidan government, and Ali Mahmoud, appointed by the GNA. Due process seemed to have collapsed and a flurry of litigation was unleashed once again, this time taking until July 2017 for the GNA to complete Mahmoud’s appointment.

There was also a struggle on the ground for control of the LIA headquarters in Tripoli with both Mahmoud and Breish seeking to remain in the offices. They even took turns ousting each other with Mahmoud asking security guards to escort Breish from the building in September 2016 only for Breish to return to the offices in February 2017 armed with a court order in favour of his return. Mahmoud eventually obtained control of the offices in May that year.

The legal muddle meant the armed groups in control of the LIA headquarters could in effect decide which leadership team would enter. Armed groups had long been able to pressure those within the LIA – Breish recalls up to 40 ‘militiamen’ entering his office in 2014 to demand employment, noting he was then briefly detained by them when he refused to accede to their demands.

Such developments provided context for the ongoing London-based proceedings over the contested leadership of the LIA – a somewhat bizarre spectacle whereby a UK judge sitting in a UK court was being asked to rule on the procedural validity of LIA appointments as laid out in Libyan law. The judge eventually ruled in March 2020 that the GNA resolution appointing Mahmoud was ‘incapable of being successfully challenged before the Libyan courts’.

Neither Mahmoud or Breish were in the courtroom when this verdict was delivered. Both were in fact in detention in Tripoli – apparently after yet another set of legal proceedings emanating from another of the LIA’s early investment decisions involving Palladyne International Asset Management (PIAM). 

PIAM was appointed as an investment manager for $700 million of LIA, LAIP and Libyan Foreign Bank funds in 2007. Its CEO Ismail Abudher is the son-in-law of the late former Libyan prime minister Shukri Ghanem and, in 2013, the LIA became aware of investigations into concerns over allegations of possible financial impropriety by Abudher in the Netherlands, leading the LIA to refer the issue to its lawyers.  

Abudher denied the allegations but in May 2014 the LIA board of directors removed PIAM due to concerns over the management of the funds. The LIA claimed the funds were under complete control of PIAM without representation of the original investors, questioned the fees charged by PIAM as excessive and identified payments to intermediaries to be reviewed.

PIAM challenged the decision to remove it in the courts in the Cayman Islands on the basis that it violated the asset freeze, and also brought proceedings against Ahmed Jehani and Ali Baruni, whom the LIA had appointed as replacement directors of the funds in 2014. In January 2019, the judge ruled in the LIA’s favour, noting that ‘concerns regarding the risks faced by the Libyan Investors in leaving the Plaintiff [PIAM] in control of the substantial investments held for the Libyan state were real and genuine… There were clearly a number of grounds for concern which included fees, performance and the absence or slow delivery of information’.

PIAM lost on all counts in the court of first instance and in the Cayman Islands Court of Appeals. PIAM then appealed to the Privy Council which has reportedly refused to hear the application.

The case had ripple effects in Tripoli and laid bare the administrative chaos. Following the release of the draft judgement in the Cayman Islands, the LIA removed the directors it appointed in 2014 and reappointed PIAM.

Mahmoud was subsequently arrested on 6 February 2019 on an arrest warrant issued by the Libyan prosecutor general. He would remain in detention until April when he was released and returned to his post. Breish was arrested soon after seemingly on charges relating to allegations of inappropriately using Libyan public money. He was also released in April and says all charges against him have been dismissed.

In Tripoli, the remaining members of the LIA board of directors subsequently denied knowledge of the decision to reappoint PIAM and voided the decision under the authority of its acting chair, only for the board of trustees to then rule the voiding invalid. Four new directors were then appointed to manage the investments instead of PIAM.

The LIA has explained its decision to re-appoint PIAM as an interim solution because the LIA-appointed directors ‘refused to recognize the authority of the GNA-appointed board of directors and could legally act without any board oversight’.

Yet it is difficult to understand why PIAM would be re-appointed and not another entity given the legal proceedings and the concerns arising from the allegations levelled at PIAM. Mahmoud said he is unable to comment on the Palladyne case as it remains ongoing in the courts.


Tim Eaton is a senior research fellow with Chatham House’s MENA Programme. His research focuses on the political economy of the Libyan conflict. In 2018, he authored a report on the development of Libya’s war economy which illustrates how economic activities have become increasingly connected to violence.




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