Abu Dhabi, UAEMonday 1 June 2020

Bank failed to raise alarm over huge write-down of frozen Libyan assets

Unidentified financial institution remains under investigation over accounting failure

Assets once controlled by former Libyan leader Col Muammar Qaddafi and his family have been frozen in the UK. EPA
Assets once controlled by former Libyan leader Col Muammar Qaddafi and his family have been frozen in the UK. EPA

A financial institution responsible for a huge write-down in the value of Libyan frozen assets held in the UK remains under investigation after it failed to raise the alarm over a multi-million-pound accounting error, the UK government has revealed.

Officials have refused to identify the institution they have been investigating for at least three months after being forced to revise the amount held by UK companies downwards by up to £840 million to £11.2 billion.

The unidentified bank sent in the wrong figures for a 2017/18 government report and failed to report the discrepancy when it sent in drastically lower figures for the next annual review. The mistake was only picked up in 2019, according to a government statement in parliament this week.

The mistake represented a seven per cent cut in the £12 billion previously identified by the government to have frozen in Britain for the future benefit of the Libyan people.

“OFSI identified an inconsistent figure relating to Libyan frozen funds …. and contacted the institution for an explanation of the figure,” according to a government statement in response to questions from veteran Northern Irish politician Reg Empey.

“The financial institution stated that an incorrect figure had been submitted in the previous year as part of its submission,” the statement said. “There is currently no evidence to suggest that frozen funds have been depleted or moved.”

Mr Empey has campaigned for frozen funds to be used to compensate families of victims of Libyan-backed Irish terrorism and criticised the UK government’s failure to follow the lead of countries including France, Germany and the USA.

He had previously told the Belfast News Letter that the write-down was a “massive amount” and added: “Given the government’s handling of this issue over a 20-year period, they cannot expect people to react with anything other than scepticism.”

Victims of terrorist attacks during the 30-year conflict known as The Troubles this week launched a fresh attempt to sue Libya for supplying the Irish Republican Army with plastic explosives during Muammar Qaddafi’s time in power.

The UK Treasury, which has oversight of the body that monitors UK sanctions, declined to say how long it had been investigating the institution involved in the accounting error. It said it could not be named for “legal reasons”.

The frozen funds are under the control, either directly or indirectly, of the Tripoli-headquartered Libyan Investment Authority (LIA). It is believed to have $67bn (Dh246bn) of frozen assets worldwide held by institutions including HSBC, Goldman Sachs, Nomura and Societe General, leaked documents from 2011 showed.

Updated: January 10, 2020 10:14 PM

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