A Long-Delayed Audit of Libya’s Central Bank Is to Go Ahead

A long-delayed international audit of Libya’s central bank is finally going ahead after the country’s prosecutor threatened legal action and a military commander made it a condition to lift a crippling oil blockade, judicial officials said.

The audit of the bank in Tripoli, which handles billions of dollars annually in oil revenues, is to be conducted by Deloitte. Western and Libyan officials had accused bank Governor Sadiq Al-Kabir of obstructing the audit after he referred a check to pay for the review to the Libyan Audit Bureau, which held it up on technical grounds. The review will also apply to a parallel central bank in the east that has received billions of Libyan dinars printed in Russia.

Kabir has denied that he was stalling. The review took on added urgency after the forces of eastern military commander Khalifa Haftar, who’d launched a war in 2019 to overthrow the internationally recognized government in Tripoli, said on Saturday that a six-month blockade of oil ports and fields would be lifted only when there was a mechanism to fairly distribute oil revenues and an audit. Haftar’s war has drawn in military intervention by the United Arab Emirates and state-linked Russian mercenaries on his side, while Turkey has backed the government in Tripoli.

On Wednesday, the Libyan prosecution was informed that the payment had finally gone through, a day after state prosecutor Sadiq Al Sour addressed Kabir and Audit Bureau head Khaled Shakshak to demand that the payment for the audit be processed, a source in the prosecution office told Bloomberg. In his letter, Sour said the delay was obstructing a prosecution investigation into money laundering.

Central bank and audit bureau officials didn’t immediately respond to requests for comment.

In a statement, the U.S. condemned what it said was the “illegal” delay in the audit. Last week, United Nations Secretary General Antonio Guterres asked the Security Council to take action to move the audit forward.

The long-marginalized east of the country has complained that it wasn’t getting its fair share of oil revenues. Kabir’s opponents in Tripoli say his exclusive control over letters of credit makes it hard for the government to plan economic policy, while powerful militias in the capital profited from a parallel currency market.

Approval of the audit alone may be insufficient to persuade Haftar to lift the blockade. The National Oil Corp., backed by the UN Libya mission and the U.S., has proposed revenues be collected in an NOC account and frozen for four months while a mechanism to distribute petrodollars is worked out. Haftar and his backers wanted an agreement on dividing the funds immediately, diplomats involved in the negotiations said, with the revenues sent to a foreign account.

The NOC has accused the UAE of blocking the agreement. In a tweet over the weekend, UAE State Minister for Foreign Affairs Anwar Gargash said his country wanted the oil to flow as soon as possible, but only when there were safeguards against using the revenues to further the war.

©2020 Bloomberg L.P.

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