Bloomberg News

U.K. Says It Will Release Libya Funds When Banks Are Accountable

December 10, 2011

Dec. 9 (Bloomberg) -- Britain will release Libyan assets frozen in the U.K. once authorities in the North African country demonstrate they can manage them effectively, said the Foreign Office minister for the Middle East and North Africa.

“There’s an issue about us holding onto assets, but clearly the government here has got to be absolutely certain that it can handle the assets and that the banks can use it effectively,” the minister, Alastair Burt, said in an interview yesterday while visiting Tripoli.

Libyan assets frozen in the U.K. include almost 64 million pounds ($100 million) deposited by the former government of Muammar Qaddafi in embassy accounts at the British Arab Commercial Bank, according to U.K court documents. There is also Libyan property in London that has been frozen.

The question of the assets was raised early in the conflict that led to the Qaddafi regime’s ouster, with the National Transitional Council calling for money to be released to help fund its military efforts. After the late leader’s flight from Tripoli in August, members of the NTC said the money was needed for reconstruction.

Western officials have said legal complications prevented the money from being released quickly. Burt is the first senior western official to say publicly that the unfreezing of assets was conditional on Libya’s authorities demonstrating they had a banking system able to process the funds.

Elections in June

Libya’s new interim cabinet, picked by the ruling NTC and sworn in last week, is tasked with centralizing political and military authority as it prepares for elections, due to be held in June. Clashes in Tripoli this week between militias highlight the security difficulties it is facing, while lines at fuel stations and threats of strikes over pay point up the need to stabilize the economy.

Libya has a total of about $168 billion in assets abroad that were frozen as a result of United Nations Security Council resolutions passed shortly after Qaddafi began a crackdown on protesters who called for the overthrow of his government.

Most of the overseas assets, about $106 billion, are owned by the central bank, said the bank’s former chairman, Farhat Bengdara. About $37 billion of that is frozen in the U.S.

Deputy Prime Minister Mustafa Abu Shagour said the new Cabinet’s priority is to obtain the release of the assets.

“The Libyan people are in dire need of these funds,” he said at a Tripoli news conference this week.

Abu Shagour said Libya has set up a committee to work with the UN and its specialist agencies to free up the assets. Burt said the U.K. was ready to help.

Must Be ‘Certain’

“We will support requests from Libyan authorities for the de-designation of institutions like the central bank of Libya so that it can receive back assets,” Burt said, referring to the list of entities targeted by sanctions. We have to be “absolutely certain that it can handle the assets and that the banks can use it effectively.”

The UN can unfreeze the former regime’s assets through a new Security Council resolution, which could order a partial release for a specific purpose, such as payment of salaries, or the removal of a specific agency, such as the Libyan Investment Authority, from the sanctions list.

Court action abroad may be necessary, however, for Libya to recover assets held in the personal accounts of members of the ousted government, such as Qaddafi, who was killed in Sirte on Oct. 5.

--With assistance from Caroline Alexander in London. Editors: Heather Langan, Antony Sguazzin

To contact the reporter on this story: Chris Stephen in Tripoli at cstephen9@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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