The search for deceased Libyan leader Muammar Gaddafi’s rumored $100 billion illicit fortune has hit the Big Apple.
An application filed by the Libyan government in Manhattan federal court seeks records from eight major banks related to Gaddafi’s finances “in what could become the largest international asset recovery effort of all time,” according to attorneys involved in the matter.
More than $100 billion was allegedly stolen by Gaddafi during his time as Libya’s ruler from 1969 to 2011, when he was overthrown by U.S.-supported rebels.
“While the total amount stolen by Gaddafi, his family, and his agents is currently unknown and some place the number as high as $200 billion, [the Libyan government] currently estimates that at least tens of billions of dollars’ worth of assets belonging to the Libyan people were stolen by Gaddafi and his agents,” states the asset-recovery application, filed on Dec. 9 by the Libyan Asset Recovery and Management Office (LARMO).
Libya has plunged into chaos since Gaddafi’s ouster, making it hard for investigators to track down his alleged ill-gotten gains, the application states.
“Among other things, between 2014 and 2020, Libya experienced a multi-sided civil war in which competing regional factions struggled for control, often with the support of rival foreign powers and mercenaries,” the application states.
“During this difficult period, several entities purported to seek to recover and repatriate assets misappropriated by Gaddafi and his family. These efforts were generally unsuccessful as a consequence of Libya’s political instability and the lack of a clear administrative structure for managing the asset recovery process.”
However, LARMO stated it believes records held by New York banks will provide evidence that will help identify and trace assets and will assist with its effort to identify the persons improperly holding such assets. LARMO said it believes Gaddafi transferred his finances in dollar-denominated transactions using the Clearing House Interbank Payments System (“CHIPS”). The CHIPS system is used for most dollar-denominated transactions, as well as transactions where the dollar is used as an intermediate currency to facilitate a currency exchange.
“U.S.-based correspondent banks that execute these clearing transactions keep detailed records showing the source and destination for all such transactions,” the application states.
When announcing the application, LARMO’s attorneys from BakerHostetler said the litigation is part of “what could become the largest international asset recovery effort of all time.”
“This application is the first step in both determining where stolen assets have been hidden and working on their eventual return to the Libyan people,” BakerHostetler partner Oren Warshavsky said in a press release.
But the New York proceedings hit a roadblock soon after the application was filed. On Dec. 16, LARMO general manager Mohamed Ramadan wrote a letter to presiding U.S. Judge John Koeltl claiming that BakerHostetler and co-lead counsels from Holland & Knight didn’t have authority to launch the New York litigation.
“Unfortunately, the legal firms who brought this case and were engaged by my predecessor at LARMO, have acted without appropriate legal authority, despite my letter to them. This letter clearly instructed them to cease ‘all and any activities’ subject to my authorization for any further activities, which they have ignored, and which unfortunately you have not been made aware,” Ramadan wrote in the letter.
“LARMO does not support their filing, as it is contrary to our strategy of positive engagement with banks and other financial institutions, and we would ask you to dismiss or dispose of the application.”
BakerHostetler responded in a Dec. 20 letter in which Warshavsky told Koeltl that he and his colleagues were looking into the matter.
No other details are included in the New York court filings, but Africa Intelligence reported that a feud between Ramadan and LARMO President Anwar Arif has Libya’s government at a standstill about what to do with the case.
“Both Anwar Arif and Mohammed Ramadan Mensli are claiming leadership of the entity in charge of tracking Libyan assets abroad,” Africa Intelligence reported on Dec. 21, referring to LARMO. “This rivalry is endangering the legal proceedings launched in the United States against eight of the world’s biggest banks.”
In a follow-up Dec. 24 article, Africa Intelligence stated that Baker & Hostetler and Holland & Knight have suspended their investigations as they seek to understand the strife within LARMO.
Neither Warshavsky nor his co-lead counsel at Holland & Knight responded to requests for comment.