One of the first orders of business in post-Moammar Gadhafi Libya is to clean out the rotten wood.
Tops on that list is investigating corruption at the Libyan Investment Authority, the country’s sovereign wealth fund. Rafik Nayed, the fund’s acting chief executive, said in an interview with the Wall Street Journal that its investment operations are on hold while it looks through $65 billion in holdings to examine dealings with people tied to Gadhafi.
“We aren’t interested in new deals,” said Nayed to the Journal. “My mandate…is to untangle the inheritance of the [Gadhafi] regime and stabilize” the country’s national wealth.
Nayed said he wants to create an independent committee, staffed with forensic accountants and finance experts, to conduct the probe in a bid to prevent the perception of a witch hunt.
“The dark cloud of poor governance and corruption of the previous regime will be with us for a long time unless there is a comprehensive review” of past investments, Nayed said to the Journal. “There has to be a structure [for the review]. Every losing investment does not indicate corruption, and every corrupt deal does not mean that [the investment] lost money.”
Among the deals Nayed wants to specifically scrutinize are $4 billion in derivative and alternative investments, including those made with made with Goldman Sachs Group Inc. and Société Générale SA.
The LIA lost $1.3 billion in options trades with Goldman in 2008. Goldman offered a $50 million payment to an outside advisory firm owned by the son of the head of Libya’s state-run oil company to defray losses. Goldman never made the payment and has denied wrongdoing. It declined comment to the Journal.
The Securities and Exchange Commission is investigating whether Goldman or other financial firms violated the Foreign Corrupt Practices Act in their dealings with the Libyan sovereign-wealth fund.
Société Générale paid an unspecified amount to Leinada Inc., a Panama-registered company, to help structure and advise on a $1 billion investment vehicle in 2008 for the Libyan fund, the Journal reported, citing documents it reviewed. The National Transitional Council, the new Libyan governing authority, is examining whether any payments Société Générale made ended up in the hands of people linked to the Gadhafi regime.
A spokesman for Société Générale declined to comment to the Journal on Friday. The bank previously has said it “complies with all applicable rules and regulations” related to sovereign-wealth funds.
Source: http://blogs.wsj.com
Tops on that list is investigating corruption at the Libyan Investment Authority, the country’s sovereign wealth fund. Rafik Nayed, the fund’s acting chief executive, said in an interview with the Wall Street Journal that its investment operations are on hold while it looks through $65 billion in holdings to examine dealings with people tied to Gadhafi.
“We aren’t interested in new deals,” said Nayed to the Journal. “My mandate…is to untangle the inheritance of the [Gadhafi] regime and stabilize” the country’s national wealth.
Nayed said he wants to create an independent committee, staffed with forensic accountants and finance experts, to conduct the probe in a bid to prevent the perception of a witch hunt.
“The dark cloud of poor governance and corruption of the previous regime will be with us for a long time unless there is a comprehensive review” of past investments, Nayed said to the Journal. “There has to be a structure [for the review]. Every losing investment does not indicate corruption, and every corrupt deal does not mean that [the investment] lost money.”
Among the deals Nayed wants to specifically scrutinize are $4 billion in derivative and alternative investments, including those made with made with Goldman Sachs Group Inc. and Société Générale SA.
The LIA lost $1.3 billion in options trades with Goldman in 2008. Goldman offered a $50 million payment to an outside advisory firm owned by the son of the head of Libya’s state-run oil company to defray losses. Goldman never made the payment and has denied wrongdoing. It declined comment to the Journal.
The Securities and Exchange Commission is investigating whether Goldman or other financial firms violated the Foreign Corrupt Practices Act in their dealings with the Libyan sovereign-wealth fund.
Société Générale paid an unspecified amount to Leinada Inc., a Panama-registered company, to help structure and advise on a $1 billion investment vehicle in 2008 for the Libyan fund, the Journal reported, citing documents it reviewed. The National Transitional Council, the new Libyan governing authority, is examining whether any payments Société Générale made ended up in the hands of people linked to the Gadhafi regime.
A spokesman for Société Générale declined to comment to the Journal on Friday. The bank previously has said it “complies with all applicable rules and regulations” related to sovereign-wealth funds.
Source: http://blogs.wsj.com
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