UK courtroom becomes latest battleground in Libyan civil war
Libya's sovereign wealth fund is currently involved in two multi-billion dollar lawsuits in London's courts.
One, adjourned on Monday by the High Court until January, pits the fund against Goldman Sachs and Societie Generale, and claims advice the two financial services companies gave the Libya Investment Authority (LIA) cost it $3.5 billion, even while they made huge commissions.
In the other, London's Commercial Court is ruling on a point of procedure that will decide which of the LIA's two rival chairmen, each backed by one of the country's two rival governments, is legitimate - and entitled to control the $66 billion fund.
Hassan Bouhadi, the Malta-based chairman backed by the Tobruk government, launched a lawsuit in London's Commercial Court last week to determine who has the authority to appoint directors to the LIA, and ultimately whether he is the legitimate chairman of the authority.
One chairman is aligned with the Tobruk government and the other backs the Tripoli government |
Bitterly divided
Like Libya itself, the Libyan Investment Authority (LIA) is split, with one chairman aligned with the country's internationally recognised government in Tobruk, and the other with the Tripoli government.
Bouhadi's rival, Tripoli-based Abdulmagid Breish, resigned as chairman of the LIA while he was investigated for links to the former regime of Colonel Muammar Gaddafi. He was cleared of the accusation, and claims that after he was cleared, the Tripoli-based court reinstated him as the chairman of the LIA.
He told Forbes in July that he was appointed for a three-year term in 2013, and stepped aside until the Tripoli-based court cleared him.
"Now I'm back at the position. Legally speaking, I'm the chairman."
He added: "For all practical purposes I consider myself to be the chairman and I consider them to be rogue directors. I have filed with the public prosecutor in Libya criminal cases against them."
What's been going on in Libya? | |
The General National Congress was the Islamist-led elected body ruling Libya for two years following Gaddafi's ousting and death. After its 18-month deadline to form a new constitution passed in January 2014, the body resolved to extend its mandate. |
However, Bouhadi disputes this interpretation of events. He argues that a court in Tripoli does not have the authority to appoint the LIA's chairman.
"Law number 13 very clearly states that the board of trustees appoints the board of directors," he told the BBC in an interview last month.
"I was appointed by the board of trustees, which was appointed by the government, which was appointed by the HOR [the Tobruk-based House of Representatives, more commonly translated as Council of Deputies], which is internationally-recognised."
However, Breish's lawyer told the court that the progress in the UN-sponsored peace talks could make the court case irrelevant as "everyone is working towards the 20 September deadline for signing and 20 October deadline for the transition of power", the Financial Times reported.
The next hearing in the case has been set for October.
A government of national unity would make the dispute over control of the fund moot.
However, peace talks have been dragging on for months and have yet to show real signs of progress toward a viable deal all parties can agree upon.
About 25 percent of the fund's $66 billion is in equity, and held internationally. This has been frozen by international sanctions against the former regime in place since 2011.
Another 40 percent is in holdings, companies working variously in the oil and gas field to telecoms to real estate.
The last 35 percent of the fund is held in cash deposits in Libya's Central Bank in Tripoli.
The fund's offices and all of the fund's records are currently located in Tripoli.
Legal wrangling
The legal wrangling mirrors that over the legitimacy of the country's two governments.
The Council of Deputies was elected in June last year, but its legitimacy was subsequently contested by supporters of the former, Islamist-dominated parliament, the General National Congress (GNC).
In November, the Tripoli-based Libyan Constitutional Court ruled that the June elections were unconstitutional because of the low turnout - only 18 percent of the electorate voted.
However, the Council of Deputies rejected the ruling, saying the ruling was made "at gunpoint" as the court was located in the capital, Tripoli, under the control of pro-GNC militias.
The international community has ignored the court's ruling, and regards the Council of Deputies as the legitimate government.