Shady Dealings Helped Qaddafi Build Fortune and Regime
By ERIC LICHTBLAU, DAVID ROHDE and JAMES RISEN
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
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
“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, using the department’s spelling of Qaddafi.
The wealth that Colonel Qaddafi’s 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 Qaddafi’s 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 — 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. Libya’s 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
In the first few years after trade restrictions were lifted — Colonel Qaddafi had given up his country’s nuclear capabilities and pledged to renounce terrorism — many American companies were hesitant to do business with
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 became so flush with cash that Bernard L. Madoff, the New York financial manager who stole billions of dollars in a long-running Ponzi scheme, approached officials overseeing the country’s $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-Sonosi, a member of the exiled Libyan royal family, who is familiar with many of Colonel Qaddafi’s 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 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 country’s 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 company’s 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
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
When Qaddafi aides demanded payment for the Lockerbie settlement from oil companies operating in
Other companies also struck costly deals with the government. In 2008, Occidental Petroleum, based in
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
The company also courted a Qaddafi son, Seif al-Islam. Petro-Canada sponsored an exhibit of his paintings — ridiculed by Canadian critics as “lurid” and a “triumph of banality“ — after museums refused. A
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 official in the administration of President George W. Bush, 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
Barclay Walsh contributed research.
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"The master class has always declared the wars; the subject class has always fought the battles. The master class has had all to gain and nothing to lose, while the subject class has had nothing to gain and everything to lose--especially their lives." Eugene Victor Debs