Dictators upholding an old tradition of doing it by the book

What is it about dictators and publishers? Muammar Qaddafi - presumably it's safe to call him a dictator now his own people have risen up in revolt against him - emerged last year as a 3 per cent shareholder in Pearson, the venerable UK publishing group that owns the Financial Times and Penguin, among other publishing baubles.

In 1991, after Saddam Hussein had invaded Kuwait, a global asset hunt revealed that companies associated with the Iraqi dictator had an 8 per cent stake in Hachette, the creme de la creme of the French publishing industry.

The image of Col Qaddafi struggling over his cornflakes to understand the Lex column in the FT is as absurd as the notion of Saddam curling up with a paperback volume of A la Recherche du Temps Perdu, Marcel Proust's masterpiece.

But surely it cannot be a coincidence that the ill-gotten gains of two such tyrants ended up invested in the genteel world of letters.

I believe there is clear historical evidence of the links between dictatorship and the book world. Adolf Hitler was an avid reader who would consume a book a day and ended up with a private library of 15,000 volumes.

Mao Zedong was a poet, author and philosopher who helped to found the People's Daily, the world's biggest-selling newspaper.

Before that, a young Georgian named Josef Jughashvili, part-time poet and full-time revolutionary, was a driving force behind the launch of a newspaper named Pravda, for which he wrote articles under the pen name Stalin. He went on to become the most ruthless tyrant the world has known as ruler of the Soviet Union.

It was a potent demonstration of the awesome potential of the newspaper columnist.

But I digress. Col Qaddafi's stake in Pearson is a serious embarrassment for the British company, as its chief executive Dame Marjorie Scardino recognised recently when she said she was "uncomfortable" with the Libyan presence on her share register, adding: "It is abhorrent to us what is happening in Libya."

So let's get this straight. The shares, amounting to just over 3 per cent of the total, are not held personally by the Libyan leader but by the Libyan Investment Authority (LIA), the country's sovereign wealth fund and until a few weeks ago as legitimate an institution as any other in the country.

You can be pretty sure, however, that the "brother leader and guide of the revolution" exercised what the lawyers would call a "significant measure of control" over the fund.

The LIA, set up in 2006 when Col Qaddafi was coming back into the international fold, bought Pearson shares in the open market over quite a period of time. It became public only last year, when the holding crossed the 3 per cent threshold at which stakes have to be declared.

There is no suggestion that Dame Marjorie or any other Pearson director had cosy tent tete-a-tetes with Col Qaddafi at which some "deal in the desert" was cooked up to let the Libyan leader have a sneaky glance at tomorrow's FT splash the night before publication.

Any contact with the LIA, and there was not much by all accounts, came via a shadowy European "middle man", who presumably focused on the prospects for the share price, rather than the minutiae of Pearson publishing strategy.

The assistance of this person will no doubt be sought by Pearson's lawyers as they attempt to uncover the true ownership of the LIA, now under the spotlight as a result of the freezing order on Col Qaddafi's assets issued by the US and British authorities this week.

I wish them luck. It will not be an easy job, if the case of the other bibliophile, Hussein, is anything to go by.

The investigations firm Kroll, hired by the Kuwaiti government-in-exile in 1990 to track down the late Iraqi dictator's assets, met a wall of corporate and banking obstruction, a complex network of offshore holding companies and closed Swiss bank accounts. The interest in Hachette was eventually tracked down via a Panamanian shell company.

It was frozen by the French government but remained in place until the US-led invasion of Iraq in 2003, even paying occasional dividends.

If that precedent is anything to go by, Pearson faces many years of aggravation to get Col Qaddafi off its share register. As Dame Marjorie said: "We don't choose our shareholders, they choose us."

On this occasion, Col Qaddafi appears to have chosen pretty well. The stake is now worth about US$350 million (Dh1.28 billion); depending on when the LIA began buying Pearson, he could have made at least $100m on the deal. He showed similar financial acumen on a previous deal involving shares in Fiat, the Italian car maker, which also turned in a substantial profit, and some quite shrewd investment in the London property market.

The world would have been a better place if Col Qaddafi, and all the other book-loving tyrants, had stuck to a career in stock-picking.