Multiple reshuffles stir up Libyan sovereign wealth fund

Libya Channel

The Libyan Investment Authority is undergoing drastic changes, as key members resigned last week followed by Libya’s unity government appointing a new management team for the country’s main sovereign wealth fund Monday.

The Presidency Council of the Tripoli-based Government of National Accord on Monday appointed a steering committee to temporarily assume the leadership of the LIA, Libya’s largest state fund worth approximately $67 billion.

The 5-member team will thus supersede two rival LIA chairmen, who have been vying for control of the LIA over the past two years. Hassan Bouhadi – the claimant supported by Libya’s Parliament and Interim Government in the east – resigned last Thursday, three days before the GNA order, arguing that he was unable to fulfil his mission given the current circumstances in the country. The other claimant, Abdulmagid Breish, has not officially reacted to his replacement by the GNA’s Presidency Council, which he endorsed back in April.

Several EU states and the US welcomed the Presidency Council’s decision, noting that the UN Security Council has repeatedly called for the LIA and other key state authorities to be placed under GNA supervision.

LIA chairmanship has been disputed since 2014, when the outbreak of a national conflict caused rifts through all major state institutions. The internal dispute has weakened the Libya’s position with regards to investment banks Goldman Sachs and Société Générale, which the LIA has sued over billions lost in trade deals done on behalf of the Gadhafi regime.

The GNA’s steering committee is headed by Ali Mahmud Hassan Mohamed and includes Abdelaziz Khaled Ali, Al-Hadi Najmeddin Kaabar, Khaled Khalifa Hussain al-Taher and Ahmed Abdallah Ammar. It will represent the LIA in lawsuits, but does not have the right to manage LIA assets, according to the decision issued Monday.

Its appointment came shortly after key officials of the LIA’s eastern management resigned. Hassan Bouhadi stepped back on Thursday, while Ali al-Hibri, the Parliament-backed governor of the Libyan Central Bank, announced his resignation from the LIA’s (eastern) board of trustees on Sunday.

In his letter of resignation, Bouhadi listed his team’s activities over the past two years. “Despite all these achievements, we have not been able to carry out our work as we should, because the present circumstances in Libya constitute a stumbling stone”, Bouhadi wrote. “The responsible state parties have been unable to protect and support us because of the political conflict, which has rendered it impossible for us to succeed in our work”, he added. Bouhadi also said that that his movements were constricted.

The LIA has undergone a series of reshuffles over the past years. Abdallah al-Thinni appointed Bouhadi in October 2014, replacing interim LIA Chairman Abderrahman Benyezza, who had taken over only three months earlier. In June 2014, then LIA Chairman Abdulmagid Breish had been removed after one year in office for being indicted under the Political Isolation Law, a controversial piece of jurisdiction that barred individuals too closely involved with the Gaddafi regime from public office.

Also in the summer of 2014 the LIA relocated most of its administration to Malta due to the outbreak of the civil war and fighting in Tripoli, where the fund had been based until then. Later that year, a Tripoli court decided that the PIL ruling against Breish was invalid, and in May 2015 the rival administration in Tripoli recognized Breish as LIA Chairman, ignoring the Interim Government’s appointment of Bouhadi. Bouhadi had meanwhile also set up base in Malta, meaning that the Mediterranean island hosted two rival LIA management teams.

Bouhadi and Breish had since been competing for international recognition, which lead to a London court opening a case in March this year to determine which of the two was legally in charge. In addition to the law suits over lost investments the LIA has been trying to recover some of its frozen assets abroad. Over a third of the fund’s assets remain frozen under sanctions imposed by the UN Security Council in 2011.

Attempts by the GNA Presidency Council to merge the rival LIA managements failed due the lack of recognition of the GNA by the House of Representatives, Libya’s parliament based in the east.

Bouhadi’s resignation appears to have come not only as a result of external challenges but also internal disagreements. Four days earlier the LIA board of trustees in the east had met in Bayda under the directorship of Interim Prime Minister Abdallah al-Thinni and decided to appoint a new CEO, Ali al-Shamekh Mohamed.

Media reports have claimed that the interim government pressured Bouhadi into approving this decision, ultimately triggering his departure.

It is unclear what effects these latest management changes will have on the LIA given its continued division.

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