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A London court will decide who owns Libya’s money

Case raises question of who is legitimate post-Gaddafi government

On 9 October, the High Court in London will begin hearing on the issue of who is the sole legitimate chairman of the Libyan Investment Authority (LIA), the strife-ridden North African country’s sovereign wealth fund created by former leader Muammar Gaddafi that holds about $67 billion in assets.

The ruling will be made as a result of the application in July by both contending parties for the appointment of a receiver to deal with the ongoing LIA case against two investment banks, Goldman Sachs and Société Générale, whom the fund accused of giving it wrong advice on investment decisions.

Hassan Bouhadi was appointed chairman by the LIA’s board of trustees in late September last year. Based in Malta, he has had to fend off an attempt by a former LIA chief, Abdulmagid Breish, to claim the chairmanship for himself – thisdespite his having resigned his position as chairman on 8 June last year, having been charged under the Political Isolation Law passed by the General National Congress (GNC) in Tripoli. This legislation targeted officials that were accused of serving at high levels in the regime of Colonel Gaddafi. Breish, as the chairman of the LIA, was seen as being one of them.

Breish appealed the ruling, suggesting he was ousted due to the personal interests of others rather than for reasons of public policy. Based in Tripoli, he attempted in May of this year to resume his role and chairman and CEO of the LIA – hiring the UK public relations firm Portland Communications to help press his case in the western media.

The dispute forms part of a wider battle for influence between the two broad political alliances in Libya. The Tripoli-based GNC, dominated by Islamists and backed by militias from the Misrata region, has claimed to be the true government of Libya. That claim is partly based on the fact that it is based in the country’s capital. It has been in conflict with the House of Representatives (HoR), the Tobruk-based (and secular dominated) parliament that is allied to the government of prime minister Abdullah Al-Thinni. Thinni’s administration is based in the eastern city of Al-Bayda. The bitter divide took root in 2013 and has affected a number of Libya’sinstitutions, notably the National Oil Corporation – which now has separate Tripoli and eastern units – as well as the LIA itself.

The international community recognises the Al-Thinni government as the legitimate governing authority in Libya, though a joint statement from the governments of the EU, the US and others argued the importance of the LIA’s continued neutrality. “We reiterate our expectation that those on all sides representing Libya’s independent institutions, namely the Central Bank of Libya, the LIA, the NOC and the Libyan Post Telecommunications and Information technology company  will continue to act in the long term interests of the Libyan people pending clarification of unified governance structures under a Government of National Accord,” a joint statement issued on 11 May said.

Bouhadi has pointed out that his chairmanship was approved by a board of directors, which is appointed by a board of trustees in turn appointed by the Libyan prime minister. That board derives its mandate from Libya’s Law 13 under which it is appointed and mandated by the government of the democratically-elected HoR to manage and invest Libya's sovereign wealth on behalf of the Libyan people.

“This is not about the individual but about the governance structure,” says an adviser to Bouhadi. “There has been a continuity of the board of directorsthrough 2013-2014, through to when Bouhadi was nominated by the board of trustees as the chairman. Since October last year, there have been seven board meetings, and all the subsidiaries and directors have attended those meetings from all over Libya. This is the governance process that is absolutely fundamental and is now five years old.”

Bouhadi himself affirms that the LIA is embedded in the democratic structure, is non-political and non-partisan.

There may be progress looming which would allow the UN to unfreeze the LIA’s assets, and enable it to start investing on behalf of the Libyan people. In New York, political representatives of the GNC and HoR are due to meet in early October to discuss a draft agreement that would create a unity government with a single prime minister, and including political representatives from both rival factions.

No-one is holding their breath just yet. Hardliners on both sides are holding out against concessions, and numerous hurdles must still be overcome. Some big compromises will have to be made. But the fact that both sides have agreed to talk is seen as a positive by the UN special envoy to Libya, Bernadino Leon. The HoR’s mandate runs to 20 October, and a deal really needs to be sealed by then if momentum is to be sustained.

If a unity government is formed, then the London High Court’s impeding decision should give greater clarity as to who, exactly, is at the helm of one of Libya’s most important institutions.

James is a specialist in Middle East North Africa region, covering politics and economics. He works for a number of organisations, including Transparency International, African Development Bank, Sasakawa Africa Association, Interpal, the Economist Intelligence Unit, Gulf States Newsletter and Middle East Economic Digest (MEED).