Tira Trichur, Stephanie Chambers, and David Milstead
Billions of dollars belonging to former Libyan dictator Moammar Gadhafi are sitting in Canadian bank accounts almost 12 years after his death, says a former diplomat.
Fathi Baja, who served as Libya’s ambassador to Canada from 2013 to 2017, said he kept confidential documents containing financial details about the cash stockpile after he was fired from his envoy job in Ottawa. Citing the risk of corruption, Mr. Baja said he plans to safeguard those financial records in Libya until the North African country has a democratically elected government.
Mr. Baja’s disclosure that Mr. Gadhafi secretly stashed “billions” in Canadian financial institutions during his 42-year rule in Libya – made in an exclusive interview with The Globe and Mail – comes at a critical time for both countries.
Libya is renewing its efforts to recover billions of dollars’ worth of missing assets that were looted by Mr. Gadhafi and his inner circle. That global hunt is resuming as political deadlock threatens to thwart plans to hold long-promised elections in Libya this year, fuelling fears of additional delays in repatriating state assets.
Canada, which has seen its internal affairs rocked by Libya-related scandals in recent years, is facing international criticism for its failure to find and freeze dirty money, and for its lax enforcement of global sanctions.
Given Libya’s shaky security situation, Mr. Baja says it’s his responsibility to prevent the financial assets uncovered in Canada from falling into the wrong hands, including Libyan militias. In the years following the overthrow of Mr. Gadhafi, rival factions attempted to abscond with some of his recovered assets. That’s why Mr. Baja chose to hide the cache of Canadian financial records until his country has a democratic government.
“I cannot give it to anybody else except an elected government – a legal one,” Mr. Baja said in a telephone interview from Benghazi, Libya. He declined to provide the documents to The Globe.
“There is money in these [documents], the account numbers, in fact,” he later added.
When asked to be more precise about the amount of money traced to Mr. Gadhafi at unnamed Canadian banks, Mr. Baja declined to provide specifics. “We are talking about a billionaire,” he said.
Mr. Gadhafi used front men, including Canadian proxies, to open bank accounts and shell corporations on his behalf to hide part of his fortune outside of Libya, according to two other people familiar with the matter. Additionally, Mr. Gadhafi intermingled his personal wealth with Libyan state funds in bank accounts in Canada and other countries, they said.
The Globe is not identifying the sources, who are not authorized to speak publicly, because their personal safety is at risk.
Mr. Gadhafi, who was killed by rebel fighters after being pulled from a drainpipe in his hometown of Sirte on Oct. 20, 2011, reportedly died the world’s richest man.
He, along with his relatives and agents, stole as much as US$200-billion from the Libyan people between 1969 and 2011 and potentially hid more than US$40-billion worth of those assets outside of Libya, according to estimates cited in documents filed in U.S. District Court for the Southern District of New York.
That asset-recovery case, which is being pursued by the Libyan Asset Recovery and Management Office, is an effort to trace misappropriated funds that were transferred abroad through U.S. banks.
“LARMO will use that information to commence lawsuits in the relevant jurisdictions to freeze and recover the identified assets,” reads its court filing.
Tripoli-based LARMO, which reports to the Libyan cabinet and has the backing of the UN, has also asked the U.S. State Department for more help in recovering assets pilfered by Mr. Gadhafi, The Wall Street Journal reported in April.
Mr. Gadhafi, despite being deceased, remains on the UN Security Council’s sanctions list and on Interpol’s website. (There is no single way to translate an Arabic name into English, which is why spellings can vary.)
The Canadian government, however, won’t specify the total amount of Libyan assets frozen in Canada as a result of sanctions. Nor will it comment on whether any of those frozen assets include the billions that Mr. Gadhafi accumulated in Canadian bank accounts.
“Global Affairs Canada cannot comment on frozen assets belonging to specific listed persons,” spokesperson James Emmanuel Wanki said in an e-mailed statement.
UN officials, meanwhile, didn’t respond to requests for comment about the money Mr. Gadhafi hoarded in Canadian bank accounts.
Canada has a foreign-policy interest in helping Libya recover state assets stolen by Mr. Gadhafi and his officials.
Not only did Canada play a central role in the NATO-led military intervention that ousted him in 2011, Ottawa has since contributed tens of millions of dollars to help stabilize Libya and to provide humanitarian assistance.
In June, Canada amended its Libyan sanctions regulations, signalling it is preparing to provide additional aid to the country by releasing sequestered financial assets.
Canada’s Ambassador to Libya, Isabelle Savard, then met Libyan Prime Minister Abdulhamid al-Dbeibah in July to discuss bilateral commercial relations and the likelihood of elections. Ms. Savard also met with other high-ranking officials, including Libya’s Minister of Justice, Halima Ibrahim Abdel-Rahman, whose mandate includes asset recovery.
Back in 2011, as Arab Spring protests in Egypt and Tunisia inspired an uprising in Libya, Mr. Gadhafi sold off part of Libya’s gold reserves and moved large sums of money outside his country, according to media reports. He also vowed to crush the revolt against his regime, calling protestors “rats and mercenaries.”
On Feb. 26 of that year, the Security Council imposed sanctions against Libya in response to violence against civilians.
Canada implemented those measures the following day, freezing assets belonging to Mr. Gadhafi and his children. Ottawa also imposed additional sanctions, including a prohibition on financial transactions with the government of Libya.
As a result of the UN sanctions, Canada also commenced an asset-tracing investigation to find Mr. Gadhafi’s assets, according to a public database maintained by the Stolen Asset Recovery Initiative, a joint project of the World Bank Group and the United Nations Office on Drugs and Crime.
At the time, Canada froze an estimated $2.3-billion in assets belonging to Mr. Gadhafi, his family and the Libyan government, according to a research publication from the Library of Parliament.
But on Sept. 13, 2011, then foreign affairs minister John Baird announced that Canada was unfreezing roughly $2.2-billion to provide humanitarian help to the people of Libya. (It is unclear why there is a discrepancy between the two figures.)
Sandra McCardell, who was Canada’s ambassador to Libya at the time, told a parliamentary committee days later that Mr. Baird’s announcement involved “the unfreezing of all Libyan assets held in Canada.”
It was a critical moment for Libya, which still wasn’t fully liberated despite NATO air strikes that had commenced months earlier.
Mr. Gadhafi had been chased out of Tripoli by rebels and gone into hiding, but still maintained strongholds in parts of the country, including his hometown of Sirte. That meant he and his loyalists still had access to some state assets.
It is unknown whether the money belonging to Mr. Gadhafi located in the Canadian bank accounts that Mr. Baja is safeguarding was part of Canada’s initial asset freezes or if those funds were detected after Mr. Baird announced the release of the $2.2-billion.
If Global Affairs Canada knows, it won’t say. Mr. Baird and Ms. McCardell didn’t respond to separate requests seeking comment. Bob Rae, Canada’s ambassador to the UN, said he was unable to help.
There was also another freezing order involving Libyan funds in Canada. On Aug. 9, just weeks prior to Mr. Baird’s announcement that he was removing restrictions on the $2.2-billion, Canada expelled all remaining Libyan diplomats and froze the Libyan embassy’s bank accounts.
The Globe has obtained financial records for five of the Libyan embassy’s accounts at Royal Bank of Canada. The documents, compiled by RBC’s compliance department, detail more than 8,700 transactions across the five accounts between 2004 and 2011 – the final years of Mr. Gadhafi’s regime.
RBC’s compliance officers compiled the data set because there was concern the flow of funds in and out of those accounts was abnormal for a diplomatic mission, according to a third confidential source. (The Globe is not identifying this person because the individual was not authorized to disclose this information to the media.)
Certainly, the bank records show multiple large transactions.
There were 58 transactions of $1-million or more, including eight that exceeded $11-million. An additional 173 transactions exceeded $100,000.
On Nov. 12, 2010, the records for one account show an incoming wire payment of $68.3-million. Three days later, on Nov. 15, the records show a debit of $50-million from the same account.
Then on July 2, 2010, one account showed an incoming wire payment of $14-million and a debit in the same amount on that same day.
On average, the five accounts show about 100 transactions a month, not counting monthly maintenance fees and interest paid on the balance.
The activity in the accounts picked up toward the end of Mr. Gadhafi’s rule. The embassy made 150 transactions or more in seven of the 85 months captured in the bank records. All seven months occurred in 2010 and 2011, leading up to Canada’s August, 2011, freeze on the embassy’s accounts.
It is unclear how many of those transactions RBC later flagged to the Financial Transactions and Reports Analysis Centre of Canada.
“RBC adheres to all applicable laws and regulatory requirements in the jurisdictions where we operate,” bank spokesperson Gillian McArdle wrote in an e-mailed statement.
“We also comply with all applicable government sanctions, including those issued by Canada, as well as by the U.K., U.S.-OFAC and the EU. This includes blocking or freezing of payments or accounts as required under each of the relevant sanction regimes.”
(OFAC is the acronym for the Office of Foreign Assets Control, an enforcement agency of the U.S. Treasury Department.)
The Libyan embassy in Ottawa did not respond to requests for comment.
The full scope of Mr. Gadhafi’s ill-gotten fortune in Canada remains unknown.
What is known, however, is that Mr. Gadhafi profited from Libya’s vast oil wealth, enriching himself, his children and loyalists by looting funds from state institutions.
His iron-fisted control of the state’s machinery, funds and even commercial contracts is highlighted by an American diplomatic cable referenced in LARMO’s asset-recovery case.
“Libya is a kleptocracy in which the regime – either the [Gadhafi] family itself or its close political allies – has a direct stake in anything worth buying, selling or owning,” stated the 2009 cable from the U.S. Embassy in Libya, also stressing the entire system is based on “an unholy alliance of corruption and cult-of-personality politics.”
When it comes to the billions of dollars traced to Canadian bank accounts, Mr. Baja said: “It has to do with Gadhafi himself, not his sons.”
In June, The Globe reported that his third-born son, Saadi Gadhafi, tried to orchestrate a sale of his luxury Toronto penthouse apartment, which remains subject to an asset freeze by the UN Security Council.
“Unfortunately, most of the records that would have detailed the theft of Libyan State funds by Gaddafi and his family have been destroyed or lost since the collapse of his regime,” LARMO states in its U.S. court filings.
“Despite the vast scale of the theft, LARMO has very few records indicating where Gaddafi, his family, and associates hid and continue to hide what they stole.”