By Heba Saleh and Andrew England
The internationally recognised head of Libya’s $67bn sovereign wealth fund is to appeal to the UN in an attempt to allow the fund to manage its frozen assets, despite the violent political rivalries plaguing state institutions.
Ali Mahmoud, head of a steering committee appointed by the UN-backed government to oversee the Libyan Investment Authority, said the fund was “losing a lot of money” because it was unable to manage old equity and bond investments.
The LIA’s assets have been under UN sanctions since the 2011 uprising against Muammer Gaddafi and any chance of them being unfrozen have previously been dashed by the power struggles and conflict that erupted after the dictator was toppled.
The chaos has affected the central bank, the National Oil Company and the LIA with officials backed by political adversaries bickering over the leadership of the organisations and their resources.
“There are alternative opportunities that are being missed and in some cases there are deposits in banks that are past their maturity on which we are being charged negative interest rates,” Mr Mahmoud told the Financial Times.
“This has caused us big losses especially on the bonds and long-term investment portfolios.” But Mr Mahmoud has two domestic rivals each claiming to be the rightful leader of the fund — disputes that reflect deep political divides.
The UN-backed government in Tripoli is weak, has little influence beyond the capital and is locked in power struggles with rivals, including a parliament in Tubruq that is allied to Khalifa Haftar, a military strongman who controls much of the east.
The Tripoli offices of the LIA are under the control of Abdulmagid Breish, a former leader of the organisation, who has said the fund’s assets should only be unfrozen when the political situation stabilises.
He managed to get a ruling from a Libyan court delaying the government’s decision to appoint Mr Mahmoud and his steering committee.
But Mr Mahmoud insists he is recognised by the LIA’s subsidiaries and by the international banks that hold its accounts.
On behalf of the LIA he has attended board meetings of foreign companies in which the fund holds stakes, such as UniCredit bank of Italy and First Energy Bank in Bahrain.
Mr Mahmoud said the returns on the LIA’s assets are not frozen but his committee has not touched any funds because it is only in charge temporarily.
“We are just trying to draw up a policy to stabilise and preserve these assets,” he said. “They belong to all Libyans and the future generations, and not to any political faction.”
Another figure claiming the leadership of the LIA is Ali Shamekh, who was appointed the fund’s chief executive in August by rival authorities in eastern Libya.
He says there are possible plans to open an office in London in an attempt to talk to western governments about lifting the sanctions on the LIA.
He says the sanctions affect about 65 per cent of its assets, mostly cash and equities in countries including the UK, US and Italy.
The fund has investments in about 550 companies, including hotels and downstream oil operations in Africa and the Middle East, Mr Shamekh says, and several subsidiaries, including Tamoil and Libyan Foreign Investment Company.
“It’s very difficult,” Mr Shamekh says. “We have a political division and that is reflected on all the main institutions in Libya.
It’s very difficult to operate. Even in Tripoli, I went on a private visit . . . a very quick one. But to run business from Tripoli was not possible.
Tripoli is not safe for everybody.” There is no expectation, however, that Libya’s rival power centres would reach any agreement about sovereign wealth until the wider political battles have been resolved.
“If the whole country is not stable it will be very difficult for any investor, whether it’s the LIA or not,” Mr Shamekh says.
“That day we have a united government, the second day you will have one LIA, one central bank of Libya, one NOC [state oil company.”
But Mattia Toaldo, senior analyst at the European Council on Foreign Relations, believes the LIA “will be the last and most difficult of the issues to be addressed if there is an agreement in Libya”.
Heba Saleh – Cairo and North Africa Correspondent of the Financial Times.
Andrew England – Andrew England Chief Middle East Correspondent for The Financial Times.