Libyan Investment Authority
Encyclopedia
The Libyan Investment Authority (LIA) is a government entity headquartered in Tripoli
, Libya
. It was established on August 28, 2006, by Decree 208 of the General People's Committee of Libya
(GPC) with estimated capital of $70 billion . LIA is a holding company
that oversees and manages government investment funds in various areas including agriculture, real estate, infrastructure, oil and gas and in shares and bonds. The Libyan Investment Authority is considered to be a sovereign wealth fund
.
s:
surplus. The LIA now counts the assets of the Libyan Foreign Investment Company (LAFICO), established in 1982, and Oilinvest
, founded in 1988, in its portfolio. The value of the LIA is widely quoted as 70 billion but the LIA's September 2010 management information report valued its own investment portfolio at $64 billion and the Wall Street Journal quoted a value of $53 billion in June 2010.
by British
Prime Minister
Tony Blair
, British Petroleum
(BP) signed a $900 million exploration and production agreement with the Libyan National Oil Company
. The agreement, which will likely involve an estimated USD $2 billion in investment, covers three massive, largely unexplored tracts. The NOC signed the agreement with the LIA as BP’s 15% partner in a production sharing agreement (PSA).
i joint investment fund for $2 billion equally with the Qatar Investment Corporation (QIC). Also, the General People's Congress Secretary signed two agreements in Doha
on July 2007 for establishment of a joint investment fund between QIC and LIA as well as establishment of the Libyan-Qatari Bank between QIC and the Central Bank of Libya. Also an agreement was signed concerning establishment of joint company for real estate development between Al-Diar real estate investment company (Qatar) and the Libyan Arab Foreign Investment Company.
, which needed additional funds to maintain solvability. LIA would not confirm the investment, since they are not required by Dutch or Belgian law to do so. However, later that week, the Dutch Minister of Finance Wouter Bos
admitted that the situation 'had his attention, as well as that of the Dutch Central Bank', considering previous Libyan involvement in international terrorism
.
.
, minister of financial and oil affairs for the rebel National Transitional Council, appointed Mahmoud Badi, formerly a civil servant under Gaddafi, to investigate the Libyan Investment Authority. In August 2011, Badi found "misappropriation, misuse and misconduct of funds" with $2.9 billion missing from the LIA.
The Financial Times
in September 2011 described how the LIA had had internal struggles, and had wasted funds in misplaced investments. The LIA had a complex investment portfoio that lacked transparency and was run by a closed group including a intimate friend of Saif al-Islam Gaddafi. The Financial Times interviewed directors of LIA, bankers and other Libyan officials and uncovered multiple instances of of mismanagement. Farhat Bengdara, for example, the formmer governor of the central bank of Libya and member of LIA's board of trustees said that there was a clear lack of governance at the LIA. On Begdara's recommendation Sami Rais (a co-worker at the Libyan Central Bank) was appointed as chief executive of LIA in October 2009. Rais tried to change the way the fund was run but was repeatedly blocked by upper management. Rais asked the accountancy firm KPMG
to do an audit. KPMG's report in May 2010 showed the LIA was unable to manage its investments properly. They found that LIA had never had a complete audit of their accounts, their was no risk management (overseeing or reporting), deal term sheets were often unsigned and there were differences between custodian and financial statements and custodian reports.
Tripoli
Tripoli is the capital and largest city in Libya. It is also known as Western Tripoli , to distinguish it from Tripoli, Lebanon. It is affectionately called The Mermaid of the Mediterranean , describing its turquoise waters and its whitewashed buildings. Tripoli is a Greek name that means "Three...
, Libya
Libya
Libya is an African country in the Maghreb region of North Africa bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west....
. It was established on August 28, 2006, by Decree 208 of the General People's Committee of Libya
General People's Committee of Libya
The General People's Committee , often abbreviated as the GPCO, acted as secretaries for various Libyan ministries during the era of the Libyan Arab Jamahiriya...
(GPC) with estimated capital of $70 billion . LIA is a holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
that oversees and manages government investment funds in various areas including agriculture, real estate, infrastructure, oil and gas and in shares and bonds. The Libyan Investment Authority is considered to be a sovereign wealth fund
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
.
Board of trustees
Although ultimately overseen by the prime minister, the LIA’s management includes some of Libya’s most established banking personalities. LIA consists of an 11-member board of trusteeTrustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
s:
- Chairman - Baghdadi MahmudiBaghdadi MahmudiBaghdadi Ali Mahmudi was Secretary of the General People's Committee of Libya from 5 March 2006 to as late as 1 September 2011, when he acknowledged the collapse of the GPCO and the ascendance of the National Transitional Council as a result of the Libyan civil war...
- Deputy Chairman - Abdul-Hafiz Zlitni: GPC Assistant Secretary.
- Board member - Taher al-Juhaymi: GPC Planning Secretary
- Board member - Muhammad al-HuwayjMuhammad al-HuwayjMuhammad Ali Al-Huwayj is a Libyan politician who served as Secretary of the General People's Committee of Libya for Finance. He replaced former GPCO Minister of Finance, Dr. Ahmed Munaysi Abd-al-Hamid.-Activities:...
: GPC Finance Secretary - Board member - Farhat BengdaraFarhat BengdaraFarhat Omar Bengdara is a Libyan politician and banker who was the governor of the Central Bank of Libya until he defected to the anti-Gaddafi side in the course of the Libyan civil war...
: Governor, Central Bank of LibyaCentral Bank of LibyaThe Central Bank of Libya is the monetary authority in Libya and enjoys the status of autonomous corporate body. The law establishing the CBL stipulates that the objectives of the central bank shall be to maintain monetary stability in Libya , and to promote the sustained growth of the economy in...
. - Executive Director - Mohamed H. Layas
Activities
The LIA was established in August 2006 to manage Libya’s vast and mounting oil revenuePeak oil
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field...
surplus. The LIA now counts the assets of the Libyan Foreign Investment Company (LAFICO), established in 1982, and Oilinvest
Tamoil
Tamoil is the trading name of the Oilinvest B.V. Group, a European based downstream oil group.The Tamoil Group, which was purchased by Libyan state entities in the late 1980s, is involved in supplying, trading, refining and selling petroleum products.Recently, Roger Tamraz’s Netoil group of...
, founded in 1988, in its portfolio. The value of the LIA is widely quoted as 70 billion but the LIA's September 2010 management information report valued its own investment portfolio at $64 billion and the Wall Street Journal quoted a value of $53 billion in June 2010.
BP Production Sharing Agreement
On May 29, 2007, during a visit to Muammar al-GaddafiMuammar al-Gaddafi
Muammar Muhammad Abu Minyar Gaddafi or "September 1942" 20 October 2011), commonly known as Muammar Gaddafi or Colonel Gaddafi, was the official ruler of the Libyan Arab Republic from 1969 to 1977 and then the "Brother Leader" of the Libyan Arab Jamahiriya from 1977 to 2011.He seized power in a...
by British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
Prime Minister
Prime Minister of the United Kingdom
The Prime Minister of the United Kingdom of Great Britain and Northern Ireland is the Head of Her Majesty's Government in the United Kingdom. The Prime Minister and Cabinet are collectively accountable for their policies and actions to the Sovereign, to Parliament, to their political party and...
Tony Blair
Tony Blair
Anthony Charles Lynton Blair is a former British Labour Party politician who served as the Prime Minister of the United Kingdom from 2 May 1997 to 27 June 2007. He was the Member of Parliament for Sedgefield from 1983 to 2007 and Leader of the Labour Party from 1994 to 2007...
, British Petroleum
BP
BP p.l.c. is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "supermajors"...
(BP) signed a $900 million exploration and production agreement with the Libyan National Oil Company
National Oil Company
A national oil company is an oil company fully or in the majority owned by a national government. According to the United States Energy Information Administration, NOCs accounted for 52% global oil production and controlled 88% of proven oil reserves in 2007.Due to their increasing dominance over...
. The agreement, which will likely involve an estimated USD $2 billion in investment, covers three massive, largely unexplored tracts. The NOC signed the agreement with the LIA as BP’s 15% partner in a production sharing agreement (PSA).
Economic and Social Development Fund
The LIA also manages the Economic and Social Development Fund (ESDF). Established in February 2006, the ESDF manages substantial assets in Libya across a number of sectors to benefit Libya’s poor. The LIA’s share in BP’s PSA provides a direct conduit via which oil wealth can be recycled. However, some Libya experts believe that the presence of two state-owned companies in BP’s deal reflects divisions and tensions at the executive level in Libya, particularly over who controls the oil wealth.Libyan-Qatari Fund
During August 2007, LIA agreed to establish a Libyan-QatarQatar
Qatar , also known as the State of Qatar or locally Dawlat Qaṭar, is a sovereign Arab state, located in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its...
i joint investment fund for $2 billion equally with the Qatar Investment Corporation (QIC). Also, the General People's Congress Secretary signed two agreements in Doha
Doha
Doha is the capital city of the state of Qatar. Located on the Persian Gulf, it had a population of 998,651 in 2008, and is also one of the municipalities of Qatar...
on July 2007 for establishment of a joint investment fund between QIC and LIA as well as establishment of the Libyan-Qatari Bank between QIC and the Central Bank of Libya. Also an agreement was signed concerning establishment of joint company for real estate development between Al-Diar real estate investment company (Qatar) and the Libyan Arab Foreign Investment Company.
Investment in Fortis
In July, 2008, LIA bought a share in the Dutch-Belgian bank of FortisFortis (finance)
Fortis N.V./S.A. was a company active in insurance, banking and investment management. In 2007 it was the 20th largest business in the world by revenue but after encountering severe problems in the financial crisis of 2008, most of the company was sold in parts, with only insurance activities...
, which needed additional funds to maintain solvability. LIA would not confirm the investment, since they are not required by Dutch or Belgian law to do so. However, later that week, the Dutch Minister of Finance Wouter Bos
Wouter Bos
Wouter Jacob Bos is a Dutch management consultant and former politician of the Labour Party . He was Minister of Finance and Deputy Prime Minister in the Cabinet Balkenende IV from February 22, 2007 till February 23, 2010...
admitted that the situation 'had his attention, as well as that of the Dutch Central Bank', considering previous Libyan involvement in international terrorism
Terrorism
Terrorism is the systematic use of terror, especially as a means of coercion. In the international community, however, terrorism has no universally agreed, legally binding, criminal law definition...
.
Investments in Juventus
As of June 2010, Lafico holds 7.5% of the total shares of Italian football club JuventusJuventus F.C.
Juventus Football Club S.p.A. , commonly referred to as Juventus and colloquially as Juve , are a professional Italian association football club based in Turin, Piedmont...
.
Investments in Equity and Currency Trades
Between January and June 2008, the LIA paid $1.3 billion for options on a basket of currencies and options on six stocks (Citigroup Inc., UniCredit SpA, Banco Santander, Allianz, Électricité de France and Eni SpA) via Goldman Sachs. By February 2010, the value of these investments was 0.025 Billion - a 98% loss.Mismanagement and Misappropriation of Funds
In 2011, Ali TarhouniAli Tarhouni
Ali Abdussalam Tarhouni is a Libyan economist and politician. Tarhouni served as the minister for oil and finance on the National Transitional Council, the provisional governing authority in Libya, from 23 March 2011 to 22 November 2011...
, minister of financial and oil affairs for the rebel National Transitional Council, appointed Mahmoud Badi, formerly a civil servant under Gaddafi, to investigate the Libyan Investment Authority. In August 2011, Badi found "misappropriation, misuse and misconduct of funds" with $2.9 billion missing from the LIA.
The Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
in September 2011 described how the LIA had had internal struggles, and had wasted funds in misplaced investments. The LIA had a complex investment portfoio that lacked transparency and was run by a closed group including a intimate friend of Saif al-Islam Gaddafi. The Financial Times interviewed directors of LIA, bankers and other Libyan officials and uncovered multiple instances of of mismanagement. Farhat Bengdara, for example, the formmer governor of the central bank of Libya and member of LIA's board of trustees said that there was a clear lack of governance at the LIA. On Begdara's recommendation Sami Rais (a co-worker at the Libyan Central Bank) was appointed as chief executive of LIA in October 2009. Rais tried to change the way the fund was run but was repeatedly blocked by upper management. Rais asked the accountancy firm KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
to do an audit. KPMG's report in May 2010 showed the LIA was unable to manage its investments properly. They found that LIA had never had a complete audit of their accounts, their was no risk management (overseeing or reporting), deal term sheets were often unsigned and there were differences between custodian and financial statements and custodian reports.