Libyan fund fails in $12m claim against ‘associate' of Saif Al Islam Qaddafi

Sovereign wealth fund has taken legal action against a series of banks after the value of its investments fell

The Libyan sovereign wealth fund has failed in its legal case against an alleged associate of Saif Al Islam Qaddafi, pictured, over payments linked to an investment project. EPA

Libya’s sovereign wealth fund has failed in an attempt to sue the purported right-hand man of presidential hopeful Saif Al Islam Qaddafi over alleged secret backhanders of $12 million to secure a large investment contract.

Walid Mohamed Ali Al Giahmi – a businessman said to have close links to the Qaddafi family – pocketed the cash after hiding his involvement in the $200m investment agreement struck between the Libyan Investment Authority and investment bank Credit Suisse, it was claimed.

The Libyan was paid two separate tranches of $6m when the five-year investment was set up in 2008 and a year later when it was restructured – but the LIA claimed that it knew nothing about his role in the investment at the time.

But a London judge has ruled that the LIA cannot sue Credit Suisse, the businessman and three other companies linked to the deal because of its failure to conduct a timely and thorough investigation into the corruption allegations.

The claim against Credit Suisse was the latest brought by the LIA against international banks over its foreign investments after discovering “steep declines” in their values since the revolution that unseated Libya's former dictator Col Muammar Qaddafi.

Some had involved supposed “secret” payments from the banks to Mr Al Giahmi that were said to be the price of obtaining agreement for the projects from the LIA, court papers said.

The LIA claimed that the businessman had bribed or intimidated senior members of the fund from 2007 to 2009.

A long-running series of legal claims has included action against Goldman Sachs – which did not involve Mr Al Giahmi – that was dismissed in 2016, while the fund settled with Societe Generale (SocGen) for $1 billion in 2017.

As part of the settlement, SocGen admitted that Mr Al Giahmi was a “fraudster and payer of bribes”, court papers in London said. Mr Al Giahmi – described by the LIA as a “close political or commercial associate” of Saif Al Islam Qaddafi – denies the claims.

A claim against JP Morgan Chase was settled in June 2020 after a judge in London ruled that too much time had passed before it was made.

The claims followed the downfall of the Qaddafi regime in 2011 that led to Saif Al Islam being held in custody between 2011 and 2017.

The new chief executive of the LIA, Mohsen Derregia, instructed consultants in 2012 to investigate its poorly performing investments and whether payments to third parties could be clawed back through legal action.

London’s High Court heard that corruption and bribery through third-party payments was a source of concern to the LIA’s board as far back as 2007. The LIA said it faced difficulties in investigating corruption associated with the Qaddafi regime before the revolution.

But the High Court in London was told that the LIA did not write to Credit Suisse until nine years after the original investment deal was struck, when it claimed it “may have been a victim of a fraudulent and corrupt scheme involving bribery and intimidation”.

Judge Mark Pelling ruled that the LIA had failed to undertake “reasonable diligence” that would have uncovered potential corruption before November 2013, the limit for claims to be made.

“I have to decide whether the claimant has a real prospect of establishing at trial that it was not on notice of something that merited investigation as to whether there has been a fraud or concealment or mistake,” he wrote. “In my judgment the LIA does not have such a prospect.”

The ruling comes as Saif Al Islam Qaddafi prepares to stand for president in elections this month.

Muammar Qaddafi's son – who was sentenced to death by a Tripoli court in his absence in 2015 for war crimes – successfully overturned his disqualification from standing as a candidate.

He remains a figurehead for Libyans still loyal to the regime led by his father, whose toppling and death in 2011 heralded a decade of strife.

Lawyers for the LIA and Mr Al Giahmi have been approached for comment.