The Quest for Libya’s Assets

For this blog, I am very grateful to the New Libya Report that allowed me to use the vast array of documents they had collected.

 

Money, Money, Money Makes the World Go Round – The Quest for Libya’s Assets

by

Howard Adelman

Don’t believe a word of it. Money is important, but it does not make the world go around. The above may be the mantra of some winners, like Kevin O’Leary, Dragon Den’s former obnoxious panelist, who repeats it ad nauseam. Dragon Den’s former the obnoxious panelist on Dragon’s Den. Thankfully, the other panelists who have acquired wealth do not have the same belief. Of course it is the view of an even larger number of losers. Last night I watched Sidney Poitier in the film adaptation of Lorraine Hansberry’s prize-winning play, A Raisin in the Sun. He played Walter Younger. For Walter, to be somebody meant having money, lots of it. But he was a loser quite different than his sister, Beneatha, whom her Nigerian Yoruba boyfriend Asagai renamed Alaiyo – “one for whom bread is not enough.” Their mama was a God-fearing hardworking woman just wanting the best for her children. Walter’s wife just longed for a loving husband. It takes all kinds to make a world, but great wealth seems to attract the greedy ones, like honey does a hungry bear.

In following the money, most eyes focus on Libya’s oil reserves, refineries and port facilities for exporting oil. But, believe it or not, there is an even much larger and far more liquid immediate prize at stake than Libya’s oil assets. In December, it came to light that the prize was very much larger than had previously been estimated. Instead of merely billions of dollars, in South Africa alone, investigators claim to have identified almost two trillion in U.S. dollars as well as hundreds of tons of gold at almost U.S. $34 million a ton (from 6 to 10 billion) and six million carats of diamonds worth U.S. $200 hundred million uncut. (If cut, U.S. $6 billion) This is the largest stash of liquid assets in the world parked in heavily-guarded warehouses and does not even include the U.S. $32.5 billion (260 billion rand) held in four South African banks or in real estate assets, such as hotels in Johannesburg and Cape Town. And these tremendous sums do not include monies ferried to neighbouring countries from South Africa or held in the United States, Italy, Venezuela, Qatar, Switzerland or Tunisia. Perhaps the reports of this much wealth are exaggerated, but cut the amount by ten and it is still the largest amount of liquid assets around.

Why is South Africa the primary depository for Libyan assets? Following the friendship between Nelson Mandela and Muammar Gaddafi, the wealth was transferred for safe keeping to South Africa between 2000 and 2011 in 67 different flights flown by ex-special forces officers of the South African armed forces. Mandela’s friendship – more accurately, love – for his “brother leader” Colonel Gaddafi, whom Mandela called his guide, may surprise many of us who idealized Mandela as the twentieth century’s greatest statesman, but it is actually very understandable. Mandela had assured Gaddafi that South Africa would never turn its back on him. Why? When Mandela was in jail, and even before Western countries had begun to isolate South Africa for its apartheid policies, Gaddafi supported Mandela and the African National Congress with training, moral and financial support, including financial aid to South African blacks studying abroad.

In October 1997, heavy UN sanctions had been in place against Libya since 1992. When an air embargo prevented flights to Libya, Mandela, then President of South Africa, traveled from Tunisia by a motorcade from the border town of Ras Ajdir to Tripoli. Though Mandela traveled 100 miles to Libya soon after he was released from jail in 1990 and once again before he became president in 1994, the 1997 visit was his first official one as president. Mandela opposed the policies of Western governments determined to punish Gaddafi for not turning over two Libyan suspects for trial in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. Mandela lent his moral stature to his friend Gaddafi and supported the African Union policy advocating a trial in a third neutral country.

Only Sweden’s financial and political support for Africa could compare to Gaddafi’s, and it never even came close. Gaddafi paid for the entire African radio, television and telephone telecommunications and funded most of the cost of Africa’s first communication satellite through the Regional African Satellite Communication Organization. He started the African Investment Bank based in Sirte, Libya, the African Monetary Fund (AFM) based in Cameroon, and the African Central Bank in Abuja, Nigeria. Though considered a flake and a gadfly by Westerners, Gaddafi was respected and admired as a great benefactor by Africans. The problem now became how to get these funds back in Libyan hands. As Kenya learned in 2004 when Mwai Kibaki became president, identifying funds sent abroad illegally is one very hard task, but recovering those funds is so much harder. That was a situation when only U.S. $4 billion were missing. In the case of Libya, not only was there the question of who should be entrusted with the task. There was also the issue of which body was the legitimate authority to authorize recovery of the assets.

A state is not without precedents and expertise in this area. The United Nations Convention Against Corruption (UNCAC), in addition to its prevention, enforcement and international cooperation functions, has a very important fourth purpose, stolen asset recovery. The program is called the Stolen Asset Recovery Initiative (StAR) operating under articles 51-59 of its charter. As Article 51 of its charter reads, “The return of assets is a fundamental principle of this convention…” After the investigative stage, there are three key steps – freezing the assets, seizing the assets and, third, confiscation. The process must be initiated by a competent authority. That is, not only must the formal authority of the state be behind such a quest, but the actual agency carrying out the task must possess professional expertise. That expertise includes investigation, forensic accounting, international law – with a particular specialty in asset recovery and computer specialists. The World Bank and the United Nations Office on Drugs and Crime are cooperating agencies. The World Bank even helps fund asset recovery initiatives for states.

There are a number of reputable firms with the required expertise in this field that can be employed to carry out the actual work. They usually have years of experience in their field and employ experienced attorneys, forensic accountants, private investigators, computer forensic experts and forged document specialists. The International Asset Recovery Group (IARG) is but one example. A smaller firm in Barrie, Ontario in Canada, The Renwick Group, is another example. On the other hand, this is also a field littered with sketchy characters. Though it may be difficult to choose from among the highly specialized large firms in the business, it is fairly easy to discern questionable operations. Does the firm have a track record of success in the field? Does it have the depth of expertise or is the firm simply a one or two person operation? Is the firm skilled in overcoming barriers to identifying assets and recovering them? Does the firm have a network of international connections for this purpose? Finally, the firm should at least be literate and capable of writing proper English, the international language for such purposes.

One of the two competing firms hired to recover Libyan assets is the Texas-based Washington African Consulting Group (WACG), an overnight creation for this purpose led by Erik Magnus Iskander Goaied and incorporated on 8 August 2014. Erik is of Tunisian and Swedish background and is a Swedish citizen, though he boasts extensive South African connections and lists his position as Director of Darron international marketing of South Africa. It is probably through Darron that between 2012-2014 he worked for Denel, the South African defense company, as a technical adviser to the German/South African defense company Rheinmetall Denel Munition (Pty) Ltd. In other words, Erik was probably an arms salesman.

Darron appears to simply exist as a corporation for his personal business activities. He also indicates that he was Managing Director of Terre d’Ancêtres of Tunisia. Though the company has a logo and seems to be in the business of chartering private jets, it also advertises itself as an international advisory group (the wording in its web page sates: “advising international group”) operating in the North African market with a specialty in both “the management of petroleum companies networks” (I believe he meant to write “companies’ networks”) as well as the installation and management of farming projects. Yet there is no record I could find in his career of doing either. He also lists himself as the North African exclusive distributor for Levtrade International of South Africa. Levtrade is a medical manufacturer of Burnshield Emergency Burn Care and First Aid Kits. He also lists himself as a director of Socam Sarl in Tunisia which may have been involved in marble excavation. Before that he was evidently a consultant in the petroleum industry and the night manager of a Sheraton Hotel.

This is a very thin resumé but, in any case, demonstrates not one iota in any of the fields of expertise required for asset recovery. However, there may be a connection with his claim to being a pilot and his work for Levtrade which sells medical supplies to relief organizations. I recall an owner of an aircraft company when we were investigating the Rwanda genocide saying that he always knew that when he was not flying arms to belligerents in Africa, he would be supplying relief materials for the NGOs who followed. He claimed he was a one person early warning system for refugee flows. Could Erik have been an arms dealer?

Yet WACG in its incorporation papers lists its function as assisting the National Board for the Following-Up and Recovering of Libyan Looted and Disguised Funds and identifying and recovering Libyan assets in the United States and abroad, but not in Libya. Before I go into the role and nature of the National Board, let me elaborate further on WACG. One other founding director in addition to Erik, Douglas Keith Foree, is listed as the President and advertises himself as a “third generation oil and gas producer with over 30 years experience in exploration and development.”

Quite aside from Douglas Keith Foree’s inexperience in asset recovery, even his petroleum consulting may be questionable. Though he advertises himself as a third generation petroleum expert, the second generation seem to want nothing to do with him. In 2004, Douglas’ own father, R.L. Foree went to court to have his name removed as an officer of Mainland Energy Corp. because it was included by his son without his knowledge and permission. He only learned of his name being included as Vice-President when he went to make a change on one of the entities he controlled and was notified on 24 January 2004 of outstanding violations related to Mainland. R.L. Foree testified that he was estranged from his son and that his son took advantage and misused his name. Mr. Foree testified that Mainland had motive to use his name in that using it could achieve a smaller financial assurance fee by using his name and good history. The Commission allowed R.L. Foree’s name to be removed and fined Mainland U.S. $2,750 costs and a U.S. $4,500 penalty.

Douglas Foree may be an even bigger flake than Erik Goaied. Whatever their credentials in any other area, neither of the two founding directors has any of the requisite expertise in asset recovery. So why would the Libyan government, or, at least, one of its two governments, hire WACG? Another part of the documentary filing provides a clue. The company is listed as having paid $50,000 per month retainer over three months to the American lobbying firm The Ben Barnes Group headed by Ben Barnes, the former Speaker of the Texas House of Representatives and chief fundraiser for John Kerry.

  1. (a) DISBURSEMENT-MONIES During the period beginning 60 days prior to the date of your obligation to register to the time of filing this statement, did you spend or disburse any money in furtherance of or in connection with your activities on behalf of any foreign principal named in Item ?? Yes S No •

If yes, set forth below in the required detail and separately for each such foreign principal named including monies transmitted, if any, to each foreign principal.

Date To Whom Purpose Amount 09/15/14 Ben Barnes Group Retainer for Consulting Services $50,000.00 10/01/14 Ben Barnes Group Retainer for Consulting Services $50,000.00 11/03/14 Ben Barnes Group ‘ Retainer for Consulting Services  $50,000.00

Another piece of information is relevant. Forty-eight-year-old Erik Goaied had a practice of posting repeated supports for Gaddafi (“many Libyans want Qaddafi and the rebels (in which you have al qaeda fighters) do not represent the Libyan people.” He was also adamantly opposed to any form of Islamic government. However, WACG now claims support of Libyan Prime Minister Abdullah al-Thani. WACG was hired on the 22 August 2014 through a consultancy agreement with The National Board, more formally, The National Board for the Following-up and Recovering of the Libyan Looted and Disguised Funds.” WACG was designated as representing the Al-Thani government located in Tobruk defined as the internationally-recognized government of Libya chosen by the Libyan Parliament, the House of Representatives (HoR) on 25 June 2014.

FORMED BY DECREE OF THE COUNCIL OF MINISTERS OF LIBYA (‘the Council”) IN TERMS OF DECREE NUMBER 378 OF 2014 (“the Decree”) UNDER REFERENCE NUMBER 108/T/14 SIGNED ON 22 JANUARY 2014. The National Board herein represented by The National Board Members constituting MOHAMED BELGACEM TAG (“Tag”), Head of the Board, MOHAMED ABDULLAH EL BAKSHI (“El Bakshi”) and YOUSSEF ALI SIRIHEID (“Siriheid”)’

The agreement between the National Board and WACG provides for payment of U.S. $50,000 per month in consultancy payments until such time as all assets have been recovered as well as a 10% recovery fee of all assets recovered. The agreement can only be rescinded upon the agreement of both parties. However, the agreement requires expeditious performance by WACG, including identifying the assets within four months.

Though the UN adopted Resolution 438 requiring countries holding Libyan assets to return them, Goalied has insisted that the Libyan government does not want the assets stored in Libya but simply wanted legal control returned so funds could be used to support “development” projects; assets would be held in the U.S. but would be under the control of the Libyan government. According to an affidavit filed with the U.S. Justice Department on 22 August 2014, the assets would be kept within the U.S. In the meanwhile, both South Africa and Jacob Zuma himself have been under threat by the UN. Charges may be brought before the ICC for theft if the assets are not returned promptly.

Mohamed Belgacem Tag at age 62 became Chair of the National Board on 22 January 2014. Tag confirmed that WACG was the only company mandated by the Libyan government to act on its behalf. Tag and Goaied had a recent meeting with Nosiviwe Mapisa-Nqakula, South Africa’s Minister of Defence, with whom they discussed the purchase of South African weaponry with the Libyan funds. Mapisa-Nqakula provided a letter of introduction. (Since he had been a consultant to Denel for two years, the reason Goaied needed a letter of introduction can only be surmised as the government offering assurances that funds were indeed held in South Africa on behalf of Libya, funds sufficient to purchase the arms.) Tag and Goaied informed Denel that Libya was interested in purchasing  Mirage F1s, Mig 21s, Mig 29s, Rooivalk attack helicopters, G6 ­cannons, unmanned aerial vehicles, missiles,, various types of ammunition worth about 8 Billion Rand (over US700 million), a lifeline for that beleaguered company as well as the Tobruk government and General Haftar.

In a nutshell, billions and perhaps trillions of U.S. dollars of purloined Libyan assets are hidden away in various countries, but primarily in South Africa.  The internationally-recognized government in Tobruk set up an assets recovery committee headed by Tag that contracted with an obscure Texas-based company with no known experience in asset recovery. WACG received funds and then passed those funds onto a very important lobby group with close connections to Secretary of State John Kerry. The U.S. would score a double gain, for the assets would be parked in the U.S., and, at the same time, the party most resistant to Islamists, more particularly General  Haftar, could buy the military equipment it needs to defeat the Islamicists.

TOMORROW: The Competition to Tobruk – Tripoli and its Fortune Hunters

Introduction to Contemporary Libya

An Introduction to Libya

by

Howard Adelman

Talk about centrifuges. Cascades of op-eds, criticisms, commentary, opinion pieces and informative articles have tumbled me about as if I was a container of both U-235 and U-238. The separation pressures to polarize positions have been much stronger than the centripetal forces in a centrifuge. Since I wrote my blog, articles have flowed into my computer in rapid succession. They have ranged from Talmudic exegesis of the Haman reference in Netanyahu’s speech to precise details about Iranian knowledge of the technical requirements, beyond enriched fuel, to make a usable atomic bomb. However, although the information may be massive and the opinions many, the contentious issue boils down to a choice between two isotopes akin to U-235 and U-238. Can one make a deal with Iran that will hold or is a much more stringent deal or no deal better?

So I am leaving the Iranian nuclear issue for now and will re-visit it at a later date. Instead of mounting complexity topping relatively simple choices, when we move to Libya we meet confusion head on. So I will have to clear the jungle before we get down to one single issue – wealth and lots of it. “Follow the Money,” This was the advice Deep Throat (Mark Felt) gave to Bob Woodward as the Watergate scandal unfolded. It certainly will apply to Libya in a myriad of ways. But in order to follow the money, you need to know who the main players are from whom you can choose the ones to follow, where they are now, where they have been and where they might be going. In addition to the pursuit of money, it also helps to know what else motivates the various players.

I begin with a brief reminder of the geography and history of Libya, a designation it only obtained in the twentieth century as part of Italy’s African colonization in 1911 as a revival of the ancient Greek name for the territorial coast, Λιβύη (Libúē), and modern Libyan Arabic, li;bjǣ, to replace the Ottoman Tripolitania. At the peak of Italian rule in 1939, 35% of Benghazi was Italian. It is easy to forget that Libya is the fourth largest country in Africa and the seventeenth largest in the world. Covering 700,000 square miles, Libya, on the southern shores of the Mediterranean Sea, about the middle of northern Africa, is located between Algeria to the west, Egypt to the east, and Chad and Niger to the direct south. If the Islamic State rebels in Libya hook up with Boko Haram in northeastern Nigeria through Chad and Niger, the northern part of Africa would be cut in two by radical Islamicists. More significantly, Islamic State would have access to the tenth largest oil reserve in the world in a country with a population of only six million.

Tripoli, Libya’s largest city (population over a million) and its capital, is located on the Mediterranean coast to the west. To the east on the eastern side of the Gulf of Sidra is Benghazi, Libya’s second largest city (population 700,000). The city was called the garden of Hesperides in the ancient world and mentioned by both Herodotus and Thucydides when the city was an outpost of civilization surrounded by hostile tribes and desert on three sides. The exception was the very fertile steppe of the mountains to the northeast with its treed ravines enjoying a substantial annual rainfall. Benghazi is also Libya’s second legislative capital.

Benghazi lost its joint capital status in 1969 when the so-called Free Officers under Muammar Gaddafi staged their coup d’état and overthrew King Idris I who had ruled Libya since its independence in 1951. The Sanussiya Sufi order that had been a backbone against Mussolini’s regime and the mainstay of support for King Idris I, were again pushed to the side when Gaddafi made Tripoli the sole capital of Libya. With his overthrow in 2011, Tripoli re-emerged as the executive capital, but with an eventual Islamic government. Benghazi was slated to re-emerge as the legislative capital but fell under control of even more radical al-Qaeda Islamists.

Benghazi, with its ethnic diversity of African, Greek, Egyptian and a very significant Berber minority, has a small Christian community of 4,000 located around the Roman Catholic Franciscan Church of the Immaculate Conception. Though Jews lived in Benghazi since the Roman Empire, the 1948 riots forced the exodus of this ancient Jewish community. There are no Jews in Benghazi today, or, for that matter, in all of Libya.

Benghazi houses the country’s parliament, the Majlis al Nuwab, and the national library. Benghazi is also a business centre hosting the headquarters of many small manufacturing companies and large corporations such as Libyan Airlines, the Libyan Bank of Commerce and Development, the National Oil Corporation, the Al-Brega Oil Marketing Company and the Arabian Oil Company. Contemporary Libya began in Benghazi when, during Arab Spring on 15 February 2011, an uprising against Muammar Gaddafi’s government took place and appeared victorious within a week. When the Libyan army counterattacked, Ali Zeidan, a Geneva-based Libyan human rights lawyer who returned from exile to become Libya’s envoy to France, persuaded President Sarkozy to intervene with the French Air Force backed by UNSC Res. 1973. That intervention supported the armed resistance on the ground.

But it was not the liberals who eventually emerged triumphant in Benghazi. By 31 July, Ansar al-Sharia (al-Qaeda) was in full control of the city and its environs and subsequently reinforced and strengthened puritanical Islam with a complete ban on alcohol. Increasing numbers of women wear black niqabs and many more men sport full beards. On the eleventh anniversary of the destruction of the twin towers in New York City, on 11 September 2012, a very well-armed group of 125-150 Ansar al-Sharia militants attacked the American embassy in Benghazi and killed Ambassador J. Christoper Stephens, Foreign Service Information Officer Sean Smith, and former Naval SEALS Tyrone Woods and Glen Doherty. Since then, Benghazi has remained under the control of Ansar al-Sharia jihadist militants and has been the main centre of opposition to rule from Tripoli.

Libya’s National Transitional Council (NTC), the face of the political opposition to Gaddafi, on 8 August 2012 handed over power to the newly-elected General National Council (GNC) with a mandate to rule for eighteen months until 7 February 2014. The GNC was a coalition primarily of two major factions, the National Forces Alliance (NFA), a “liberal” party, and the Justice and Construction Party (JCP), a party affiliated with the Muslim Brotherhood and dedicated to an Islamic state through democratic means. There were also a number of independents, for example, the Workers Group with 20 seats and the Southern Group with 31. On 7 July 2012, Zeidan was elected as an independent congressman for Jufra, He lost out as Speaker to his Ambassador boss in Delhi, Mohammed Magariaf. They had both defected in 1980 and together founded a political movement, the National Front for the Salvation of Libya (NFSL) that became the core of the NFA under the leadership of Mahmoud Jibril. Zeidan became the official spokesman of the Libyan League for Human Rights. After losing as Speaker in 2012, Zeidan resigned his seat and ran for Prime Minister against the JPT candidate, Mohammed sl-Harari. Parliament elected him Prime Minister-designate by a vote of 93 to 85. On 14 October 2012, Ali Zeidan was appointed Prime Minister by the GNC after he submitted his cabinet.

In the conflicted political terrain of Libya, his rule was rocky. Zeidan was kidnapped on 10 October 2013 in Tripoli by an al-Qaeda militant group that held him responsible for handing over Abu Anas al-Libi (Nazih Abdul Hamed Nabih al-Ruqai’i) to American authorities who wanted him for masterminding the 1998 U.S. embassy bombings. Zeidan was released the same day. The event that served as the catalyst of his downfall began when the GNC tried to extend its authority beyond the 7 February deadline until the end of 2014. Riots broke out across Libya. The sailing out of the rebel-held port of Sidra on 11 March 2014 of the rogue oil tanker Morning Glory that Zeidan had promised to prevent, seemed to seal Zeidan’s fate. It did not help that the State prosecutor, Abdel-Qader Radwan, had banned Zeidan from travelling abroad because he faced an investigation over the alleged financial irregularities. After a parliamentary committee voted no-confidence in Zeidan and removed him from office, he defied that travel ban and fled Libya on 14 March 2014.

Perhaps the military divisions were even more significant than the political ones. Khalifa Belqasim Haftar, a Libyan General who was part of the free officers’ coup in 1969, went into opposition when he was a captive in Chad in one of Gaddafi’s military interventions into a neighbouring country. Haftar ended up going into exile in the U.S. and became an American citizen. In 2011, he returned to Libya to take part in the revolution and took leadership of all the ground forces under General Abdul Fatah Younis, When Younis was assassinated in August, though Omar El-Hariri was second in command, Haftar assumed effective control of the armed forces opposed to Gaddafi. When the GNC initially appeared to be holding onto power past its deadline in February 2014, Haftar, with the support of fellow officers, built a secret army. Between May and August 2014, a second civil war broke out in Libya beginning on 16 May when Haftar launched Operation Dignity with a ground and air assault on the Muslim jihadists in Benghazi and the Libyan parliament. All Islamist parties, both democratic and jihadist, with the support of Qatar and Turkey united to form operation Fajr Libya (Libyan Dawn) on 13 July 2014. A second full civil war was underway.

In the GNC-scheduled new elections for 25 June 2014, the secularists scored a clear victory over parties with an Islamist agenda but with only 15% of eligible voters having cast ballots. The Council of Representatives (CoR) replaced the NTC on 4 August 2014. The new government under Prime Minister Abdullah al-Thani neither endorsed nor condemned Operation Dignity, but branded Islamic militants as terrorists. Did these include the members of the Justice and Construction Party (JCP) affiliated with the Muslim Brotherhood who supported a democratically elected Islamic state? When al-Thani’s government tried to take possession of the parliament in Benghazi, they were repulsed by the local Islamic militants affiliated with al-Qaeda and were forced to flee to Tobruk, the port city of 120,000 near the Egyptian border and the site of many World War II battles as well as one of the initial places of the rebellion against the Gaddafi regime. Haftar himself, like Sisi in Egypt, determined to completely destroy not only the jihadists but the supporters of JCP as well.

The CoR set up a temporary seat of government, the Council of Deputies (CoD) and a House of Representatives (HoR). The GNC and the Islamicists rejected the legitimacy of the elections and the HoR. Further, the June 2014 elections were declared unconstitutional by the Libyan Supreme Court in November 2014. The cabinet of Abdulla al-Thani in Tobruk and its HoR seemed orphaned, but this past week formally appointed Haftar head of the armed forces.

Thus, an Islamist rival government rules from Tripoli as the legal continuation of the General National Congress (GNC) elected in July 2012 and reconvened after Islamists rejected the 2014 election results and formed the Council of Representatives (CoR). Dawn of Libya itself is divided among the Libya Central Shield Force (LCSR), the Libya Revolutionaries Operating Room (LROR), the Misrata Brigades and the Zawiya militias. Dawn of Libya was determined that their brand of Islam would not go the route of the Muslim Brotherhood in Egypt or the Ennahda Party in Tunisia. After seesaw battles, Dawn of Libya won control of the oil port of al-Sidra and finally the refinery in R’as Lanuf on the western side of the Gulf of Sidra opposite Benghazi. The CoR with this military support rules from Tripoli while CoD and HoD rule from Tobruk as the one internationally-recognized government of Libya. Benghazi and its district is governed by a third militant Islamic group identified with al-Qaeda.

If this were not complicated enough, a fourth seat of government arose in Derna, east of Benghazi on the Mediterranean coast with a population of about 150,000. Derna is Libya’s most religious city and hosts Libya’s most extremist jihadist radicals. It traces that radicalism back to at least the days of the Barbary pirates and the Battle of Derna in 1805 when American forces led by General  William Eaton in America’s first imperial victorious battle overseas captured Dema with 500 U.S. marines, mercenaries and 4-5,000 Barbary troops by marching 500 miles across the desert from Alexandria. In 2007 in Iraq, American troops found a list of foreign fighters in the Iraqi insurgency; 52 of the 112 Libyans on the list came from Derna. An estimated 800 volunteers from Derna had been fighting under the Islamic State banner in Syria.

On 18 February 2011, the rebellion broke out in Derna and the National Transitional Council took over even before a new government was established in Tripoli. In April 2014, 300 Libyan Islamic State militants from the Syrian al-Battar Brigade slipped back into Derna joining a force of 1,100 already there and increased their size further by bringing other radical groups under their flag. Last August, special forces from Egypt and the United Arab Emirates attacked Derna and destroyed a militant jihadist camp. On 5 October, the Islamic State militants struck. By the end of October 2014, local Islamicist rule was replaced when the more extreme jihadist radicals pledged allegiance to Islamic State.

What was surprising is that their military leader was a Yemeni militant from the Syrian Civil War, Mohammed Abdullah known as Abu al-Baraa al-Azdi. He was assisted by an aide to Abu Bakr al-Baghdadi, Abu Nabil al-Anbari, both veterans of the Iraqi conflict. Though opposed by rival locally-led radicals, such as the Abu Salim Martyrs Brigade, the Islamic State radicals took control of government buildings and security vehicles declaring the Derna district part of the caliphate. In public, they beheaded judges, civilian officials and others who refused to submit to their rule, enforced the separation of male and female students, and closed the law school. The Islamic Youth Shura Council flogged any who refused to follow their interpretation of sharia law. The beheaded bodies of two human rights activists in Derna, Mohammed Battu and Sirak Qath, abducted on 6 November, were found in December. Abu Bakr al-Baghdadi was named chief representing the caliph of the Islamic State to govern the district they designated as Wilayah Barqa. Abu al-Baraa al-Azdi was named a religious judge.

Islamic State used its base in Derna to organize a suicide bombing in Tobruk, the temporary seat of Libya’s internationally-recognized government, a car bombing outside Labraq air force base in al-Bayda, other suicide against Libyan security forces in and around Benghazi, and a car bomb attack outside both the Egyptian and UAE embassies in Tripoli. Islamic State fighters launched an attack on a luxury hotel in Tripoli used by journalists, visiting Westerners as well as leaders of the Islamist-backed provisional government killing eight, including a former marine, David Berry, working as an American security contractor. Islamic State lost only two fighters.

Islamic State declared that all other jihadist groups, including those affiliated with Al Qaeda, had to submit to their authority. Thus far, Ansar al-Sharia, the radical jihadist group that had attacked the American embassy in Benghazi and killed the ambassador on 11 September 2012, has refused to submit to Islamic State authority. However, the Benghazi Revolutionary Shura Council pledged allegiance to Baghdadi.

In February, Islamic State took control of Nofaliya and appointed Ali Al-Qarqaa as emir of the town. On a Libyan beach just over three weeks ago, on 15 February 2015, Islamic State militants dressed in black beheaded 21 handcuffed Egyptian Coptic Christian hostages wearing orange jumpsuits; they had been captured from Sirte in January. They released a video of the murders.

President Abdel Fattah al-Sisi of Egypt threatened reprisals and the next day followed through by bombing Islamic State targets in Libya on the border and in Derna. Egypt claimed 50 militants had been killed. Egypt had become directly involved in the Libyan conflict and on 18 February 2015 launched ground attacks by special forces units in coordination with the Libyan army that already had recaptured villages and roads surrounding the city. As well as Egypt, Chad, Qatar, Sudan, Turkey and the United Arab Emirates (UAE) are providing arms to the different factions in direct contravention to a UN imposed arms embargo. For example, 35 aircraft from Qatar have been transferring weapons and ammunition in support of both the Islamic government in Tripoli as well as Islamic State centred in Derna. So why have Obama administration officials been negotiating with Qatar and why has Obama met with Qatar’s al-Thani?

The 15-nation Security Council 2011 imposed arms embargo on the Gaddafi regime in Libya has failed miserably. “The capacity of Libya to physically prevent (arms) transfers is almost nonexistent and there is no authorization to enforce the arms embargo on the high seas or in the air as there were during the 2011 revolution,” concluded an experts panel in its report to the UNSC that recommended UN naval intervention. When the UN gives exemptions to allow the internationally-recognized government to import arms to help fight the militants, the arms are diverted to the militants. For example, in 2013 the UNSC permitted Belarus to send 3,000 tons of ammunition to Libya. Militants seized the munitions and distributed the arms to independent radical militias. Further, not one ship exporting oil illegally has been seized. The Panel recommended a UN maritime blockade of Libya to control the inflow of arms to and the export of oil by radical jihadists.

Since civil war broke out nine months ago, at least a thousand Libyans have been killed and 7% of the population has been displaced. The International Crisis Group (ICG) believes that all the parties are competing for the ultimate prize, Libya’s oil infrastructure and financial institutions. I will suggest that the real prize is much larger in more immediate terms. Bernardino León, the UN Secretary-General’s Special Representative, has relentlessly pursued reconciliation and convened two rounds of talks in Geneva on 14-15 and 26-27 January 2015. The two main rival blocs in Tripoli and Tobruk tentatively agreed to a new framework, but on 23 February, the Tobruk-based HoR suspended its participation in the reconciliation talks. Since then, Algeria hosted secret meetings among 200 Libyan. Representatives of Libya’s rival parliaments held talks in Morocco to be followed by a second meeting in Brussels of municipal representatives from across Libya to work on confidence-building measures.

Libya, riven at the very least by four competing militarized political factions – two competing governments, one Islamic and one liberal, in two different cities, Tripoli and Tobruk – both assaulted by even more extremist Islamist militants in Benghazi and Dern, of which Islamic State is the most extreme and now has a foothold in the country with at least three distinct affiliated groups, one in each region of the country, Barqa in the east, Fezzan in the desert south, and Tripolitania in the west centred around Tripoli, the capital. Though it is simplistic, it helps if the factionalism is pictured as follows:

Tripoli – GNC backed by Salafi jihadists and supported by Turkey in rivalry with Dawn of Libya, a more radical group supported by Qatar

Benghazi – Ansar al-Saharia (al-Qaeda)

Tobruk – CoR or HoR, internationally recognized government dominated by “liberals”

Derna –Islamic State, also reputedly supported by Q,atar, supported by the Shura Council of Islamic Youth in Derna but not by the Islamist militants of the Abu Salim Martyrs Brigade

However, I opened by reminding readers of Deep Throat’s advice, “Follow the money.” That is what I will do tomorrow to suggest that behind all these ideological differences there is also a backstory about the quest to gain control over billions in Libyan wealth.