Corruption and kleptocracy seem fairly predictable in Libya, although it’s a fair journalistic effort to confirm or refute what may be common knowledge. Perhaps an example of that is The New York Times publishing confirmation of what most New Yorkers knew in the early 1970’s – that the New York City Police Department was a corrupt institution, incapable and/or unwilling to police itself. (See, e.g., the books Serpico by Peter Maas, Prince of the City by Robert Daley).
Now, three of the Times’ heavy hitters, Eric Lichtblau, David Rohde and James Risen, have reported that – in addition to whatever passes for routine corruption in Libya, some – but not all – foreign companies operating in Libya complied with Qaddafi’s demand that they contribute to the $1.5 billion settlement for its responsibility in the bombing of Pan Am Flight 103 (the Locherbie bombing) and other attacks.
Does this make these companies accessories after the fact? excerpted from Shady Dealings Helped Qaddafi Build Fortune and Regime:
In 2009, top aides to Col. Muammar el-Qaddafi called together 15 executives from global energy companies operating in Libya’s oil fields and issued an extraordinary demand: Shell out the money for his country’s $1.5 billion bill for its role in the downing of Pan Am Flight 103 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 Libya’s legal settlement with victims’ families for acts of terrorism. 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 Qaddafi’s 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 strongman’s 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, using the department’s spelling of Qaddafi. was unthinkable. But some companies, including several based in the United States, appeared willing to give in to Libya’s coercion and make what amounted to payoffs to keep doing business, according to industry executives, American officials and State Department documents.
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 Tripoli included in a batch of classified documents obtained by WikiLeaks. In 2009, the cable said, American diplomats warned Libyan officials that its dealings with Iran were jeopardizing Libya’s 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 country’s nuclear capabilities and pledged to renounce terrorism — many American companies were hesitant to do business with Libya’s government, officials said. But with an agreement on a settlement over Libya’s role in the Pan Am bombing over Lockerbie, Scotland, finally reached in 2008, officials at the United States Commerce Department 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, 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.