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| BANKING CARTEL to CO-CONSPIRATORS: | "COME 'N GET IT!" |
"...list of the luminaries who have advised this sovereign wealth fund over the years informally and formally including Sir Howard Davies of the LSE, Tony Blair, Mario Tronchetti Provera the chairman of Pirelli and one of the most eminent figures of the investment community and Lord Jacob Rothschild, who has acknowledged that he acted as an ‘informal’ adviser."
by Charlie Parker on Aug 26, 2011 at 07:40
The new government in Libya is understandably turning its attention to the level of fraud that may be uncovered in Libya’s sovereign wealth fund.
One would imagine that a fund governed almost exclusively by members of Gaddafi’s inner-circle could potentially have had some dodgy dealing going on.
Yet at the moment, the attacks on the fund coming from the new regime muddle a number of distinct issues. They will have to be unravelled in establishing whether this is just the inevitable mopping up process after the falling of a dictator, or whether the investigation drags in global financial institutions as complicit in the fraud.
The civil servant based in London who will lead the investigation for the new regime, Mahmoud Badi, said: 'We are collecting all the information and data needed to evaluate the state of these assets, and will look at all the misdoings and corrupting and those responsible for it.'
The fund has a transparency rating of just two out of 10 from the Sovereign Wealth Institute (and it probably got one of those points for having a website which is now shut down – I kid you not). So it is fair to say that there are plenty of different ways in which the regime could have taken money out of this fund.
However, the new government is focusing attacks on the fees being charged by the external managers of portions of the assets- institutions like Credit Suisse. This attack is being linked to the investigation into fraud. They are clearly two distinct issues. The managers may well be overcharging but that does not mean money is being embezzled. Likewise, it is entirely likely the portion of the fund deposited with external institutions and invested in some major assets like Juventus Football Club and FT publisher Pearson has been well-run and the fraud has occurred at home.
The fund has always acknowledged that a portion was invested locally away from its external managers. The hope is that the fraud, if it is uncovered, was only carried out with this portion of the fund and that no external managers were complicit. However, it is reasonable for people to respond by pointing out that as the value of the assets in this fund have plunged in recent months as the revolution has taken place, it is hard for the banks to justify the fact they have continued to accept fees on its portfolio. Surely returning those fees would be a sign of good will to the new administration as it fights off a humanitarian crisis. Who knows, they might just keep the mandate if they did.
We need to tread carefully of course on these matters because of legal issues but it seems amiss not to make a little list of the luminaries who have advised this sovereign wealth fund over the years informally and formally including Sir Howard Davies of the LSE, Tony Blair, Mario Tronchetti Provera the chairman of Pirelli and one of the most eminent figures of the investment community and Lord Jacob Rothschild, who has acknowledged that he acted as an ‘informal’ adviser.
Of course to be fair to these individuals it may well be that their advice actually led to the fund going out and buying physical assets in the Western world and every dollar spent buying real assets abroad was a dollar that Gaddafi could not spend at home.
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