Kickbacks between Libya and the west have helped Gaddafi cling to power
All Gaddafi's rapprochement with the west has achieved is to give him the
resources to tighten his grip on the Libyan people
-
- *Alexander Chancellor
*<http://www.guardian.co.uk/profile/alexanderchancellor>
- The Guardian <http://www.guardian.co.uk/theguardian>, Friday 25
March 2011
- Article
history<http://www.guardian.co.uk/commentisfree/2011/mar/25/gaddafi-libya-deals#history-link-box>
[image: Libyan leader Muammar Gaddafi] Muammar Gaddafi's deals with the west
may have helped him tighten his grip on the Libyan people. Photograph:
Louafi Larbi/Reuters
Colonel Gaddafi is nothing if not a caring father. He does everything he can
for his boys, arranging, for example, that they grow hugely rich from
corrupt dealings with foreign companies. Extracts from leaked state
department documents published in the New York
Times<http://www.nytimes.com/2011/03/24/world/africa/24qaddafi.html>provide
the evidence for this. Emanating from
WikiLeaks <http://www.guardian.co.uk/media/wikileaks>, they include one
state department cable which in 2009 came to the pithy conclusion:
"Libya<http://www.guardian.co.uk/world/libya>is a kleptocracy in which
the regime either the al-Qadhafi family itself
or its close political allies has a direct stake in anything worth buying,
selling or owning." (The cable used the department's spelling of Gaddafi.)
Other cables revealed it sometimes demands billion-dollar "signing bonuses"
for contracts with western oil companies. A Canadian company, Petro-Canada, was
reported in the Toronto Globe and
Mail<http://www.theglobeandmail.com/news/national/time-to-lead/how-canadian-companies-navigated-the-complexities-of-dealing-with-libya/article1950982/>not
only to have paid one such bonus but also to have sponsored an
exhibition of the dreadful paintings of Saif Gaddafi and to have been
involved, through a middleman, in getting him to take part in a pheasant
shoot on Princess Anne's Gloucestershire estate.
This bonanza of kickbacks and corrupt deals, in which western companies
greedy for Libyan oil participated, got under way when the US reopened trade
with Libya in 2004, the year Tony Blair paid his famous visit to the colonel
in his desert retreat and kissed him on his hairy cheeks. Their embrace
seems even more nauseating now, for it marked the beginning of a period in
which the Gaddafi regime began to accumulate the wealth with which it may
yet frustrate the purposes of the US, France and Britain.
According to the New York Times, US officials believe this wealth includes
tens of billions of dollars in cash that the colonel is using to pay
soldiers, mercenaries and supporters in his struggle for survival. Fierce
though the allied bombardment of Libya has been, it has not yet stopped the
fighting on the ground. At the time of writing, combat between rebels and
Gaddafi forces is continuing in several cities.
The lifting of sanctions was Gaddafi's reward for promising not to support
terrorism any longer, or to develop nuclear weapons. The hope was that this
former "mad dog" of the Middle
East<http://www.guardian.co.uk/world/middleeast>would miraculously
turn himself into a responsible international partner. It
seems strange in retrospect that anybody could have thought this possible,
and indeed it wasn't. All that his rapprochement with the west has achieved
is to give Gaddafi the resources with which to tighten his tyrannical grip
on the Libyan people and give him a chance of clinging on to power against
the odds.
So cynical has Gaddafi been in his dealings with the west that (again
according to the New York Times) he has tried to get American energy
companies to reimburse him in kickbacks the sum of $1.5bn (£928m) he agreed
in 2008 to pay in compensation to victims of the Lockerbie bombing and other
acts of terrorism.
Given what we have done over the past few years to strengthen his regime
against its opponents, it seems only fair we should intervene now on behalf
of the rebels. But as usual we are doing it in a cack-handed
way<http://www.guardian.co.uk/world/2011/mar/23/libya-no-fly-zone-leadership-squabbles>.
Our authority for attacking Libya is UN Security Council Resolution 1973,
which restricts us to taking "all necessary measures to protect civilians
under threat of attack", and that we say is all we are doing; but everybody
knows and we hardly even bother to deny that, as in Iraq, where the
declared objective was to stop Saddam Hussein's development of WMD, our real
purpose is regime change. Furthermore, we won't say when or why we will stop
attacking Libya, and we can't even agree who should be running the show. John
Boehner, the Republican speaker of the House of Representatives, made a fair
point when he wrote this week to President
Obama<http://www.nytimes.com/2011/03/24/us/politics/24congress.html>to
complain that "there is lack of clarity over the objectives of this
mission, what our national security interests are, and how it fits into our
overarching policy for the Middle East". It's a point that could be made
just as appropriately to David Cameron and Nicolas Sarkozy
March 24, 2011
Shady Dealings Helped Qaddafi Build Fortune and Regime By ERIC
LICHTBLAU<http://topics.nytimes.com/top/reference/timestopics/people/l/eric_lichtblau/index.html?inline=nyt-per>,
DAVID
ROHDE<http://topics.nytimes.com/top/reference/timestopics/people/r/david_rohde/index.html?inline=nyt-per>and
JAMES
RISEN<http://topics.nytimes.com/top/reference/timestopics/people/r/james_risen/index.html?inline=nyt-per>
WASHINGTON In 2009, top aides to Col. Muammar
el-Qaddafi<http://topics.nytimes.com/top/reference/timestopics/people/q/muammar_el_qaddafi/index.html?inline=nyt-per>called
together 15 executives from global energy companies operating in
Libyas oil fields and issued an extraordinary demand: Shell out the money
for his countrys $1.5 billion bill for its role in the downing of Pan Am
Flight
103<http://topics.nytimes.com/top/reference/timestopics/subjects/p/pan_am_flight_103/index.html?inline=nyt-classifier>and
other terrorist attacks.
If the companies did not comply, the Libyan officials warned, there would be
serious consequences for their oil leases, according to a State Department
summary of the meeting.
Many of those businesses balked, saying that covering Libyas legal
settlement with victims families for acts of terrorism was unthinkable. But
some companies, including several based in the United States, appeared
willing to give in to Libyas coercion and make what amounted to payoffs to
keep doing business, according to industry executives, American officials
and State Department documents.
The episode and others like it, the officials said, reflect a Libyan culture
rife with corruption, kickbacks, strong-arm tactics and political patronage
since the United States reopened trade with Colonel Qaddafis government in
2004. As American and international oil companies, telecommunications firms
and contractors moved into the Libyan market, they discovered that Colonel
Qaddafi or his loyalists often sought to extract millions of dollars in
signing bonuses and consultancy contracts or insisted that the
strongmans sons get a piece of the action through shotgun partnerships.
Libya is a kleptocracy in which the regime either the al-Qadhafi family
itself or its close political allies has a direct stake in anything worth
buying, selling or owning, a classified State Department cable said
in
2009<http://www.nytimes.com/interactive/2010/11/28/world/20101128-cables-viewer.html#report/libya-09TRIPOLI99>,
using the departments spelling of Qaddafi.
The wealth that Colonel Qaddafis family and his government accumulated with
the help of international corporations in the years since the lifting of
economic sanctions by the West helped fortify his hold on his country. While
the outcome of the military intervention under way by the United States and
allied countries is uncertain, Colonel Qaddafis resources including a
stash of tens of billions of dollars in cash that American officials believe
he is using to pay soldiers, mercenaries and
supporters<http://www.nytimes.com/2011/03/10/world/africa/10qaddafi.html>
may help him avert, or at least delay, his removal from power.
The government not only exploited corporations eager to do business, but
willing governments as well. Libyas banks apparently collected lucrative
fees by helping Iran launder huge sums of money in recent years in violation
of international sanctions on Tehran, according to another cable from
Tripoli included in a batch of classified documents obtained by
WikiLeaks<http://topics.nytimes.com/top/reference/timestopics/organizations/w/wikileaks/index.html?inline=nyt-org>.
In 2009, the cable said, American diplomats warned Libyan officials that its
dealings with Iran were jeopardizing Libyas enhanced world standing for the
sake of potential short-term business gains.
In the first few years after trade restrictions were lifted Colonel
Qaddafi had given up his countrys nuclear capabilities and pledged to
renounce terrorism many American companies were hesitant to do business
with Libyas government, officials said. But with an agreement on a
settlement over Libyas role in the Pan Am bombing over Lockerbie, Scotland,
finally reached in 2008, officials at the United States Commerce
Department<http://topics.nytimes.com/top/reference/timestopics/organizations/c/commerce_department/index.html?inline=nyt-org>began
to serve as self-described matchmakers for American businesses.
At least a dozen American corporations, including Boeing, Raytheon,
ConocoPhillips, Occidental, Caterpillar and Halliburton, gained footholds,
or tried to do so. In May, the Obama administration and the Qaddafi
government signed a new trade agreement, designed, according to Gene Cretz,
the American ambassador to Libya, to broaden and deepen our bilateral
economic relations.
Libya became so flush with cash that Bernard L.
Madoff<http://topics.nytimes.com/top/reference/timestopics/people/m/bernard_l_madoff/index.html?inline=nyt-per>,
the New York financial manager who stole billions of dollars in a
long-running Ponzi
scheme<http://topics.nytimes.com/top/reference/timestopics/subjects/f/frauds_and_swindling/ponzi_schemes/index.html?inline=nyt-classifier>,
approached officials overseeing the countrys $70 billion sovereign fund a
few years ago about an investment opportunity, according to a State
Department summary of the episode in 2010. We did not accept, a Libyan
official reported.
Colonel Qaddafi, the State Department said, was personally involved in many
business decisions. He worked with local riqaba councils, an oversight
committee set up by the Libyan government to dole out business with foreign
firms, and insisted on signing off on all contracts worth more than $200
million. He also learned how to hide money and investments in case sanctions
were ever imposed again, as they recently have been.
Colonel Qaddafi and his family set up accounts in banks around the world
that are in the names of members of Libyan tribes that remain loyal to his
government, said Idris Abdulla Abed Al-Senussi, a member of the exiled
Libyan royal family, who is familiar with many of Colonel Qaddafis business
dealings. (Some accounts may have been frozen by authorities, who have
blocked access to tens of billions of dollars.) And Qaddafi relatives
adopted lavish lifestyles including posh homes, Hollywood film
investments<http://www.nytimes.com/2011/03/09/business/09beckerman.htm>and
private parties with American pop stars.
When Colonel Qaddafi was not making the decisions, one of his sons whom he
has anointed to run various sectors of the countrys economy often was.
Daniel E. Karson, executive managing partner at Kroll, a risk-consulting
firm, recalled in an interview that an international communications company
he represented tried to enter the Libyan cellular phone market in 2007. From
the outset, Libyan officials made it clear that the foreign companys local
business partner would have to be Muhammad Qaddafi, the eldest son of the
Libyan ruler.
We advised them they would have to go through Muhammad Qaddafi, said Mr.
Karson, who declined to identify the client. This was not going to be done
on the basis of, as they say in retail, price, quality and delivery.
Fearful of going into business with the Qaddafis, he said, the company made
no investments in Libya.
Coca-Cola got caught in the middle of a fierce dispute between Muhammad
Qaddafi and his brother Mutassim over control of a bottling plant the soda
maker had opened in 2005, forcing it to shut down the plant for months amid
armed confrontations, a diplomatic cable noted.
And Caterpillar, the Illinois machine maker, was about to finalize a
lucrative deal in 2009 to provide equipment for infrastructure projects when
Libya demanded the company become a partner with a state-owned company
controlled by the Qaddafis, according to the State Department documents.
Caterpillar resisted and was blocked by Libya from the work after
intervention by American diplomats failed to break the impasse.
When Qaddafi aides demanded payment for the Lockerbie settlement from oil
companies operating in Libya, a State Department cable in February 2009
reported, industry executives had indicated that smaller operators and
service companies might relent and pay. Several industry officials and
someone close to the settlement, all speaking only on condition of
anonymity, said the payments went through but declined to identify the
businesses.
Other companies also struck costly deals with the government. In 2008,
Occidental Petroleum, based in California, paid a $1 billion signing bonus
to the Libyan government as part of 30-year agreement. A company spokesman
said it was not uncommon for firms to pay large bonuses for long-term
contracts.
The year before, Petro-Canada, a large Canadian oil company, made a similar
$1 billion payment after Libyan officials granted it a 30-year oil
exploration license, according to diplomatic cables and company officials.
The company also hired Jack Richards, a business consultant based in the
British Virgin Islands and close friend of the Qaddafis, as their local
agent to cement the deal, according to The Globe and Mail, a Canadian
newspaper. Mr. Richards, who could not be reached for comment, reportedly
used shooting trips to British royal estates to win the familys support.
The company also courted a Qaddafi son, Seif
al-Islam<http://topics.nytimes.com/top/reference/timestopics/people/q/seif_alislam_el_qaddafi/index.html?inline=nyt-per>.
Petro-Canada sponsored an exhibit of his paintings ridiculed by Canadian
critics as lurid and a triumph of
banality<http://www.guardian.co.uk/culture/2002/jul/23/artsfeatures3>
after museums refused. A Montreal business, SNC-Lavalin, which won more
than $1 billion in Libyan contracts, also sponsored the exhibit and a soccer
team that hired another Qaddafi son, Saadi, as a player.
In Norway, two top officials at the state-run oil company quit in 2007 and
came under government investigation after it was revealed the company had
made more than $7 million in apparently illegal consultancy agreements
with Libya.
Looking back on the decision in 2004 to resume business dealings, Juan
Zarate, a former top White House and
Treasury<http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/index.html?inline=nyt-org>official
in the administration of President George
W.
Bush<http://topics.nytimes.com/top/reference/timestopics/people/b/george_w_bush/index.html?inline=nyt-per>,
said that officials had believed then that the benefits of trying to
rehabilitate Colonel Qaddafi outweighed the obvious risks. It was a deal
with the devil, Mr. Zarate said.
The hope was that with normalization, Qaddafi would serve less as the mad
dog of the Middle East and more as a partner, he added. But I dont think
this is the way anyone would have wanted it to work out.
Barclay Walsh contributed research.
*This article has been revised to reflect the following correction:*
*Correction: March 24, 2011*
**
An earlier version of this article misspelled the name of a member of the
exiled Libyan royal family. He is Idris Abdulla Abed Al-Senussi, not Idris
Abdulla Abed al-Sonosi.
[Non-text portions of this message have been removed]
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