by Luke T. Cadigan, Laura C. Prieston
On February 26, 2011, amidst the rebellion in Libya, the United Nations Security Council froze approximately $150 billion of Libyan assets, largely from oil exports, held in foreign accounts.
As the National Transitional Council (“NTC”), which led the rebellion to oust Gadhafi, has gained acceptance as the voice for Libya’s new government, the restrictions on Libya’s assets have been eased slightly.
In general, the issues surrounding the unfreezing of the assets are relatively straightforward. As the new government in Libya is recognized by more countries, and as it shows continuing signs of credibility and stability, it appears clear that the UN Security Council and its member countries will unfreeze the country’s assets.
In August 2011, the NTC appointed Mahmoud Badi, formerly a senior civil servant in the Gadhafi regime, to track down Libya’s foreign assets, including those held by the LIA.9 Badi has also been tasked with investigating corruption at the sovereign wealth fund.
Unfortunately, Libya’s legal system does not meet most international standards for justice and rule of law. Simply put, Gadhafi’s 42-year rule destroyed any semblance of an independent judiciary. Under Gadhafi, connections, and in particular connections to the Gadhafi family, trumped all other considerations.
In sum, by taking prompt action to freeze assets held in the name of Libya and its leaders, countries containing some of the world’s largest financial centers may have averted larger problems. However, where Gadhafi and other Libyan leaders and their families had or have taken steps to move their proceeds of corruption out of Libya and into accounts or other assets not readily traced to them, the process of recovering those assets will be a long and difficult one that is, sadly, unlikely to lead to much success.