Cablegate: Libya placed billions of dollars at U.S. banks.
Libya’s secretive sovereign wealth fund has $32 billion in cash with several U.S. banks each managing up to $500 million, and it has primary investments in London, a confidential diplomatic cable shows. The cable, obtained by WikiLeaks and revealing the details of a January meeting between the head of the Libyan Investment Authority (LIA) and the U.S. ambassador in Tripoli, comes as the United States and European governments explored the possibility of freezing assets belonging to the Libyan government.
LIA, the umbrella body for Libya’s sovereign funds managing oil windfall revenues, is estimated to manage assets of around $70 billion with stakes in European bluechips such as Italian bank UniCredit and British publishing group Pearson.
LIA’s Mohamed Layas told the U.S. ambassador at a January 20 meeting that the fund operated with high liquidity and was not concerned about the volatility in the oil market. It was not immediately clear whether $32 billion represented the fund’s total assets under management or its cash component.
The cable said of Layas: “He explained that several American banks are each managing $300-500 million of LIA’s funds … He noted that the LIA’s primary investments are in London, in banking and residential and commercial real estate.”
LIA is one of the most opaque sovereign wealth funds in the world, with strong links to the government. In a rare annual report in 2009 it said it had more than 78 percent in “short-term financial instruments abroad.”
Layas said that LIA preferred doing business in London than in the United States due to the ease of conducting business and a relatively uncomplicated tax system.
LIA, through its African investment arm, has placed several hundred million dollars of its assets with London-based FM Capital Partners, created by former Merrill Lynch and JPMorgan asset manager Frederic Marino in 2009.
The cable said that LIA controlled at least seven subsidiary operations. The United States and European Union governments are considering possible sanctions against Libya that include asset freezes. Layas said LIA was interested in attracting more U.S. businesses to Libya and believed the United States could play a major role in the oil producer’s development.
He met a number of U.S. company representatives, as well as the Export-Import Bank during a recent visit to Washington, the cable said.
“Some of the advantages that Layas saw the U.S. having over European competitors for contracts in Libya are the weakness of the dollar compared to the euro, as well as U.S. access to more advanced technology,” it said.
The United Nations just voted 15-0 in favor of sanctions against Gaddafi’s regime. And Obama announced earlier sanctions against Gaddafi which includes freezing all assets held in Gaddafi and families names.
But the more dire questions for the people of Libya is when will NATO step in? It’s clear economic sanctions will not Gaddafi.