Mihkel Kärmas

Investigative ETV show “Pealtnägija” reported on Wednesday about a curious case of significant quantities of money stolen from a central bank in Libya finding their way to Estonia. The saga brings new meaning to the term “money laundering

Seven years ago, hundreds of millions worth of currency was stolen from the Central Bank of Libya, some of which ended up being laundered via Estonia. Authorities for a long time had to look on helplessly, and only now have they been able to intervene, “Pealtnägija” reported. In 2010, the Libyan state, still presided over by Gaddafi, had ordered €150 million from the German Bundesbank, in €100 and €200 denominations.

Rait Roosve, head of the cash and infrastructure department at the Bank of Estonia (Eesti Pank), told “Peatltnägija” that in and of itself, there is essentially nothing unusual about this. Roosve said: “€150 million may seem an astronomical sum to we mere mortals, but when we consider any state – say, the Republic of Estonia – it is actually a very marginal sum in terms of nationwide cash circulation.”

Middle East expert Peeter Raudsik meanwhile said: “Libya was a very prosperous country back in 2010.” “Highly respected among its Arab peers, in 2010 it even hosted the Arab League summit. Various Arab leaders were all present in Libya, with Gaddafi at the center of things, as summit host. Ordinary people there were living completely normal lives, one might say, at least if we exclude the fact that they had no freedom of speech or political expression.”

Then came 2011 and the so-called Arab Spring, sparked by unrest in Tunisia and spreading like wildfire across the region. A civil war broke out in Libya among other places, bringing a degrading end to Gaddafi’s 42-year grip over that country, when the 69-year-old’s corpse was literally dragged through the streets. How direct and indirect foreign intervention influenced the situation is a topic unto itself, but by 2017 this oil-rich country of seven million was essentially separated into two halves, with one clan ruling the western, half, centered in the capital, Tripoli, and another group in the east, based in the port city of Benghazi.

If the subsequent UN experts’ report is to be believed at least, then at the end of 2017, a key warlord from one faction broke into the vaults of the Central Bank’s branch in Benghazi.

Raudsik explained: “In one episode, it is described how Khalifa Haftar, who was the new military leader of eastern Libya and in some ways Gaddafi’s ideological successor, /…/ wages this war against western Libya, but then comes the incident where his son, Saddam Khalifa Haftar, goes and takes all those millions in dinars, euros, and dollars from the Libyan Central Bank’s Benghazi branch, in the country’s east.

According to that very same UN report, gunmen threatened bank employees before getting away with over 639 million Libyan dinars, over €159 million, US$1.9 million, plus 5,869 silver coins, all of which together totaled nearly €500 million at the time. “The UN Panel of Experts, which actually deals with Libya on a monthly basis and makes reports to the UN Security Council – I’ve listened to these reports in New York myself – provided a detailed account of this particular episode. /…/ Certainly, Haftar’s son had no right to take that money, so it definitely constituted theft,” Raudsik went on.

What makes the saga even more compelling is that, somehow, either before the heist or during it, about half of the paper bills got damaged, but in a very odd way. Matis Mäeker, head of the anti-money laundering bureau, said: “It’s likely that they were damaged there at the branch, at the Benghazi branch, when the water had flooded the safes.” Roosve took up the story: “However, this definitely wasn’t tap water or drinking water, but it wasn’t rainwater either, that much is clear. It was biologically contaminated water, for sure.”

Raudsik continued the tale. “Insofar as has been outlined, there was a sewage overflow, meaning in fact the cash got inundated with water containing fecal matter,” he said. Some of this besmirched, in more ways than one, paper money found its way to Estonia; it also needed laundering in both the literal and figurative sense. While most of the loot was spent either on making war or on more luxurious pursuits, about €80 million worth was so damaged that it couldn’t be spent in the usual way.

In 2018, Al-Jazeera’s TV channel reported on attempts being made to take the soiled money to Turkey. “Sources revealed to Al-Jazeera that this money was being moved in several installments to Turkey, where attempts were made to exchange it,” the channel reported. “Via Turkey, then to Europe: That’s how the money started moving out of Libya, and how the laundering process began,” Raudsik said.

Mäeker added that: “It seems to us that not only the Turkish mafia but also the Russians, were involved with these banknotes and the exact process by which they started moving.” Police data indicates that criminals sold the notes for about half their face value, depending on their condition, so specific and soiled denominations started appearing in circulation in countries such as France and Belgium.

The public here in Estonia remained oblivious, meanwhile, though in hindsight, it turns out that Estonia was one of the first eurozone countries where attempts were first made to exchange the infamous banknotes, again as early as 2018. Mäeker said: “The theft occurred in Libya in 2017, then in 2018 we started getting the first signals and hints that this money was present in our financial system or our economic space.”

Roosve continued: “Next, the first so-called exchange attempts, or discoveries, started coming in; attempts were being made to try [to pass off the dirty money].” Mäeker said: “We don’t fully know who went to Turkey or Russia and where they got these notes from, or at least I can’t comment on that, but it was through those routes that they reached Estonia. /…/ Those bills which were less damaged, for example, which a store was willing and able to accept, were simply paid with at regular stores or gas stations. /…/ Those that could be deposited within an ATM were indeed placed in an ATM, then a few minutes later, the same value was withdrawn in €50 bills, almost literally laundering the bills clean.”

The main channel remained, however, the Bank of Estonia, which officially offers a service whereby you can replace damaged banknotes. “When something happens to a banknote; it gets torn or ripped in half for instance, then people are able to turn in and quickly exchange that banknote for an intact one,” Rait Roosve at the Bank of Estonia confirmed.

Estonian authorities long unable to intervene

Even though the EU Agency for Law Enforcement Cooperation (Europol) issued the pursuant notice in 2019, encouraging central banks to retain banknotes allegedly stolen from Libya instead of exchanging them, Estonian authorities did not do this. More specifically, domestic law stipulates that money laundering requires an offense to predicate it before it can be proven as money laundering. However, the Libyan state has never officially stated that the bank robbery ever took place.

“They haven’t said that, no,” Mäeker conceded. “We have also tried to communicate with them, but we haven’t received any response from them,” he added. On this, Roosve said: “Even if there had been the suspicion that this was a bill stolen, by someone, from Libya, if it can’t be proven in some way, then it still has to be exchanged.”

Mäeker had the final word: “We know from the UN report, which states that very specific denominations with very specific serial numbers were actually stolen, that they display very specific water or chemical damage, but nowhere does anyone say a crime had been committed.” The Bank of Estonia did confirm to “Pealtnägija” that over the years, there have been more than 50 cases relating to bank money stolen from Libya, covering a total of 1,705 bills.


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