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