Abdulmagid Breish, the chairman of Libya’s $66 billion sovereign wealth fund, said it plans to hire external companies to manage about $11 billion of its assets under a restructuring plan.
The Libyan Investment Authority, valued at about $66 billion by Deloitte LLP, will split its assets into three distinct funds starting as soon as next year, Breish said in an interview in London yesterday.
“The LIA is preparing itself to come back to the international fold,” he said. “We will use best-of-breed fund managers, advisers and consultants,” he said, without specifying which companies will be invited to bid for the work.
The fund, established under former Libyan ruler Muammar Qaddafi, grew to be Africa’s second-largest sovereign wealth fund by the time he was deposed and killed in 2011. Some of the firm’s investments proved disastrous, leading to attempts to restructure deals, regulatory investigations and multi-billion dollar lawsuits.
The LIA is suing Societe Generale SA (GLE) and Goldman Sachs Group Inc. (GS:US) in the U.K. for a total of about $2.5 billion over investments that lost as much as 80 percent. Both lawsuits were filed in London this year.
Breish said he was considering filing other lawsuits “of a smaller magnitude, perhaps of a similar nature.” One potential target is Dutch hedge fund Palladyne International Asset Management BV, according to Breish. In March, a former employee sued Palladyne in the U.S. alleging the firm laundered funds for Qaddafi.
‘Spare no Effort’
“We have to get back what’s owed back to us, and what was wrongfully taken away,” he said. “We will spare no effort and no cost in achieving this objective.”
Palladyne has always conducted its business to the highest of standards, according to an e-mailed statement from a spokesman who declined to be identified in line with company policy.
Palladyne’s chief executive Ismael Abudher “has never been part of any Libyan regime, and he and the company have only ever acted in the best interests of their clients,” according to the statement.
The U.S. Justice Department is investigating whether financial firms, including Goldman Sachs, that sought business from the LIA before Qaddafi’s regime was toppled in 2011 made improper payments to secure investments, people familiar with the case have said. The probe grew out of a U.S. Securities and Exchange Commission investigation into payments to sovereign wealth funds.
Breish said the LIA has hired law firms and advisers, including forensic accountants at Deloitte, to handle an internal investigation into corruption.
“Whatever the SEC and Department of Justice do will only enhance our own investigation,” he said.
Breish, a Libyan national, spent nearly 30 years at Arab Banking Corp., rising to deputy chief executive officer, before joining the LIA in 2013.
Under the restructuring, LIA’s assets will be divided between three funds. The Future Generation Fund will receive oil revenue. The government can tap into the Budget Stabilization Fund and the Local Development Fund will invest in Libyan infrastructure including medical facilities, transport and education, Breish said.
The LIA directly owns about 550 companies, making up about half its assets, Breish said. Some of those will be wound down or sold, while profitable ventures will eventually be added to the Future Generation Fund.
Breish said the LIA was also overhauling its risk management, decision making, information technology and other internal systems.
The fund wants to “become one of the known, respected sovereign wealth funds, trusted by its own people, doing the job that a sovereign wealth fund is supposed to do,” he said.
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