Financial Transparency Coalition

Unfrozen Libyan Assets Must Be Managed in an Open and Transparent Way

Global Witness

LONDON – With Colonel Gaddafi’s 42 year dictatorship apparently drawing to a close, the Libyan National Transitional Council (NTC) and supporting countries must put measures in place to guard against a Libyan “oil grab” and ensure the Libyan people benefit fully from the exploitation of Libya’s natural resources, said Global Witness today.

Libya’s oil sector has been abused for decades by the small elite surrounding Gaddafi, with oil revenues enabling Gaddafi to keep a grip on power for 42 years.  A transparently managed oil sector could prove the catalyst for much-needed development and stability in the country. But any perception that the rebels or NATO countries have their own designs on Libya’s oil could stir further division and conflict. [1]

“Libya currently stands at a crossroads in several senses – one of the best ways to ensure it takes the path of peace and prosperity is to bring transparency to its oil sector,” said Brendan O’Donnell, Senior Oil Campaigner at Global Witness. “By drawing a line under Gaddafi-era corruption and the mismanagement of public wealth, the NTC could champion resource justice in the transitional constitution and set a great precedent for Libya’s future.”

Several actions must be taken to guarantee that oil and public funds benefit the Libyan people:

• No new oil concessions should be brokered until an elected government is in place. Any deals at this time could raise concerns within Libya that international support for the NTC is driven by a desire for access to oil rather than for the benefit of the Libyan people. The NTC is likely to have to honour Qaddafi-era contracts in order to get oil revenues flowing.  But no new deals for the exploration or exploitation of oil fields should be considered until an elected government can review existing rules and laws to ensure robust transparency and accountability, The Libya contact group should use its influence to ensure that companies in their markets do not attempt to broker deals at this time.
• Concrete transparency provisions should be written into the transitional constitution to ensure the just exploitation of Libya’s natural resources. These should require the public disclosure of how Libya manages its oil sector and disclosure of all revenues associated with it.

• Public finances including unfrozen assets, funds raised against frozen assets, resource trading and aid should be made open to public scrutiny. The terms of existing oil contracts should also be disclosed and details of agreements made by the NTC with governments and companies involving sovereign funds or the exchange of cash, crude oil or ‘IOUs’ secured against frozen assets should be made public and open to scrutiny by Libyan civil society and NGOs. This is particularly important as the UN, EU and others start to unfreeze and return billions of dollars of Libyan assets held overseas.

• All funds should be released through a transparent mechanism such as a strengthened Temporary Finance Mechanism which was set-up by the NTC and the Libya Contact Group to manage aid flows.

• Governments should assist the NTC to track down and recover the funds that Gaddafi and his cronies looted from the state, and punish those banks that accepted this money.  

“Our experience shows that once bad financial practice is established in a fragile state, it takes decades to undo. Libya is a small country with a lot of oil – its people should prosper from their wealth, but this may not happen unless the transition phase is managed openly,” continued O’Donnell. “Both the NTC and the Libya Contact Group have a responsibility to take all necessary steps to ensure that the people of Libya benefit fully from their country’s wealth.”

/ Ends

Note to editors:

In May this year Global Witness published a leaked document detailing $65bn worth of investments held by the Libyan sovereign wealth fund, the Libyan Investment Authority. According to the document HSBC, Société Générale and Goldman Sachs were among the key western bankers for Colonel Gaddafi’s regime.

Contacts:

Brendan O’Donnell on +44 207 492 5898 or 07970 379 387, bodonnell@globalwitness.org

Robert Palmer on +44 (0)20 7492 5860 or +44 (0)7545 645 406,rpalmer@globalwitness.org

1)  Statements by the Italian Foreign Minister Franco Frattini of Italy on state television on Monday (22^nd August) that the Italian oil company Eni “will have a No. 1 role in the future” in the North African country” do not help in terms of perceptions that the rebels or NATO countries have their own designs on Libya’s oil could stir further division and conflict.