9 March 2012.
Global Witness welcomes today’s successful recovery by Libya of a £10 million London house, previously belonging to Colonel Gaddafi’s son, Saadi Gaddafi. The High Court in London ruled that the property, in the up-market London suburb of Hampstead, rightfully belongs to the Libyan state as it had been purchased with diverted Libyan state funds.
“This judgement is extremely important as it is the first successful asset recovery case brought by a country involved in the Arab Spring. The Libyan people deserve to have their money stolen by a tyrant and his sons given back,” said Robert Palmer, a campaigner at Global Witness. “With billions squirreled away by toppled dictators and their cronies in the UK and elsewhere, we hope this is the first of many such judgements.”
The Arab Spring resulted in billions of pounds being frozen in western banks, including £12 billion of Libyan funds held in the UK. Much of this was state money, over which corrupt leaders exerted significant power. A sizable proportion was also personal assets belonging to regime figures, which were possibly corruptly acquired.
This case shows the ease with which corrupt politicians and their family members can use offshore shell companies to acquire such assets. Saadi Gaddafi appears to have bought 7 Winnington Close in 2010 via a British Virgin Islands (BVI) company, Capitana Seas Limited. The case was uncontested by Capitana Seas which was the formal defendant in the case.
Efforts to trace corrupt assets are often extremely difficult given the secrecy surrounding the owners of shell companies including those registered in British secrecy jurisdictions such as the BVI. This case was relatively straightforward as the house was known to belong to one of Gaddafi’s sons and the UK Treasury sanctions list stated that Saadi was the owner of Capitana and therefore of the house.
“The British government needs to do more to ensure that corrupt politicians and their family members cannot bring their ill-gotten gains into the UK and spend them on luxury lifestyles. If Saadi had a house, he must have had a bank account here as well: what checks did that bank do on his source of funds?” said Palmer.
“The UK should also be putting pressure on the BVI and other secrecy jurisdictions to stop allowing the set-up of anonymous companies that allow corrupt politicians to hide their assets,” said Palmer.
Global Witness is calling for better enforcement of the anti-money laundering regulations that are designed to stop the flow of illicit funds, including the proceeds of corruption. In addition governments should require company registers to list the ultimate person (‘beneficial owner’) who owns a company.
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Notes to editors
- Justice Popplewell stated that he was “satisfied under the evidence presented the property [7 Winnington Close] was wrongfully and unlawfully purchased with funds belonging to the claimant [the state of Libya]”.
- Last year Global Witness published leaked documents which detailed where the national sovereign wealth fund, the Libyan Investment Authority, had its $65bn of global investments.
- Although this is the first action brought by the Libyan authorities to recover the personal assets of the Gaddafis, some previously frozen state-owned funds have already been returned to the country.
- In another London corruption case James Ibori, former governor of Delta State in Nigeria, pleaded guilty last week at Southwark Crown Court of laundering $160m. His wife, mistress, sister and lawyer have all been convicted of money laundering.
- In June last year the British regulator, the Financial Services Authority, released a damning investigation into how UK banks handle the risk of money laundering by corrupt politicians.