Libya Wealth Fund Says Power Wrangle Is Behind Chairman's Arrest

(Bloomberg) -- The Libyan Investment Authority hit back at allegations of corruption leveled against its detained chief and suggested his arrest could be linked to an ongoing power struggle over who heads the $60 billion sovereign wealth fund.

Ali Mahmoud, who was appointed chairman by the United Nations-backed government in Tripoli, was taken into custody in the capital on Wednesday on prosecutor’s orders, according to Libyan media. The LIA, an oil wealth fund set up under former ruler Moammar Qaddafi, said it was “shocked” by the accusations. Most of the assets it oversees are now frozen under UN sanctions.

“It is no coincidence that this happened only a week before a court hearing in London involving Dr. Mahmoud against individuals purporting to be the chairmen of the LIA,” the fund said on Thursday in a statement, adding it was confident Mahmoud would be cleared of the allegations.

The LIA has been embroiled in a number of claims against major banks seeking to nullify unprofitable deals that may have been influenced by graft. While a lawsuit against Goldman Sachs Group Inc. that sought to recoup lost investments was thrown out in 2016, Societe Generale SA paid more than $1.7 billion in settlements and regulators’ fines over claims it bribed Libyan officials to arrange deals.

Leadership Choice

Controversy has swirled for years around the choice of leadership, with the sovereign wealth fund falling victim to a tug-of-war that played out between rival governments in the east and the west of the country with Africa’s largest oil reserves.

Mahmoud was appointed by a steering committee set up by the internationally-recognized Tripoli government. But the post is also contested by Abdulmagid Breish and Hassan Bouhadi, who wanted to lead it from Malta.

Breish, a former head of the LIA, has also been arrested following an order from the country’s public prosecutor for investigations, Ahmed Salim, a military spokesman, confirmed to Bloomberg.

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