HSBC And Goldman Sachs Held $335m Of Libyan State Oil Money
May 25th, 2011
May 25th, 2011
LONDON and WASHINGTON, DC – HSBC and Goldman Sachs are among the key western bankers for Colonel Gaddafi’s regime, a 2010 document leaked to Global Witness appears to show. The document details the whereabouts of state oil revenues. However the Libyan people could not know where it was invested or how much it was, because banks have no obligation to disclose state assets they hold. Global Witness is now calling for new laws requiring banks and investment funds to disclose all state funds that they manage.
Global Witness asked both banks to confirm that they held funds for the state-owned Libyan Investment Authority, and whether they still hold them. They both refused, with HSBC citing client confidentiality. Numerous other banks and financial firms are listed including Societe Generale, UniCredit and the Arab Banking Corporation.
“It is completely absurd that banks like HSBC and Goldman Sachs can hide behind customer confidentiality in a case like this. These are state accounts, so the customer is effectively the Libyan people and these banks are withholding vital information from them,” said Charmian Gooch, director of Global Witness.
The Gaddafi family has significant personal control over the state funds invested in the Libyan Investment Authority. According to the Prosecutor of the International Criminal Court, “Gaddafi makes no distinction between his personal assets and the resources of the country.”
On this basis, it is essential for banking regulators to investigate whether these banks have done enough to ensure that state funds have not been diverted to the Gaddafi family’s personal benefit.
Global Witness has been leaked a draft presentation that appears to show the investment position for the Libyan Investment Authority (LIA) as of 30 June 2010, which stood at $53 billion. The information shows the diversity of Libyan assets held by major financial institutions:
Global Witness believes there are two actions required from governments, beyond the sanctions that have already been imposed.
The first is that banks and investment houses must be required by law to disclose state funds that they manage. This would cost nothing and would allow citizens to see that state revenue is not being stolen by corrupt leaders. This fits a growing international norm on transparency of national assets. Oil and mining companies are now required, as a condition of listing on the New York Stock Exchange, to disclose payments they make to governments, allowing people of natural-resource rich states to know what their government is earning.
The second is that banking regulators must do a thorough investigation to ensure that banks holding Libya’s state funds have done appropriate checks – known as due diligence – to prevent transfers from state funds to accounts personally controlled by Gaddafi and his cronies.
“We are calling on others with additional information to go public on Libya’s other assets too or to tell us where to find them. It’s the money of the Libyan people and they deserve to know where it is,” said Ms. Gooch.
HSBC said that it had strong anti-money laundering and anti-corruption procedures in place across all of its businesses.
Click here to download the Libyan Investment Authority Funds as of June 2010 (PDF).
Notes to editors:
1. HSBC’s U.S. division is currently under investigation for possible violations of anti-money laundering rules. Media reports have suggested that HSBC may be fined up to $1billion for not doing enough to curb the flow of dirty money.
2. In a dictatorship where one individual, or a small cabal, exercises almost complete power over the state, there is a very thin dividing line between state and personal investments. Funds may look like they belong to the state but are actually under the effective personal control of a ruler who has captured the state.
3. In the report Undue Diligence we revealed how $3 billion of Turkmenistan’s gas income was at Deutsche Bank in Frankfurt under the effective personal control of then-president Niyazov. Deutsche Bank and the German regulator, BaFin, brushed off our concerns saying these were ‘state accounts’. However we had been told by a former chairman of the Central Bank that this money was treated by Niyazov as his ‘personal pocket money’.
4. Global Witness is also calling for:
5. ICC comment on Gaddafi wealth: http://tinyurl.com/ICCGaddafi.
Robert Palmer on +44 (0)20 7492 5860 or +44 (0)7545 645 406
Andrea Pattison on +44 (0)20 7492 5858 or +44 (0)7970 103 083
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Stefanie Ostfeld on +1 202 621 6674 or +1 202 577 5858
Gavin Hayman on +44 (0)7843 058756
The Task Force on Financial Integrity and Economic Development addresses inequalities in the global financial system that penalize billions of people, and advocates for improved transparency and accountability.
Global Witness is a coordinating committee and founding member of the Task Force on Financial Integrity & Economic Development .
For additional information please visit http://www.financialtransparency.org
RT @Magda_Sepul: @icrict members, we sent this letter to @antonioguterres regarding #TaxJustice 👇🏼
- Monday Mar 20 - 8:08pm