West chokes off Kadhafi funding

1st March 2011, Comments 0 comments

Western governments choked off funding to the Kadhafi regime Tuesday, freezing assets of the Libyan leader and his inner circle after the United Nations and European Union imposed sanctions.

As the government in London revealed it had foiled a plan by Kadhafi to move one billion euros worth of brand new Libyan banknotes out of Britain, others blocked any attempt to withdraw cash from abroad.

And the British publisher Pearson, owners of the Financial Times, said it had frozen froze shares in the company held by the Libyan state, saying it had taken the action after examining a UN Security Council resolution.

An asset freeze against Kadhafi, five members of his family and 20 other close associattes was one of a number of sanctions announced on Monday by the European Union which had in turn followed a UN resolution at the weekend.

Kadhafi and his inner circle are believed to have deposited tens of billions of dollars in foreign bank accounts, off the back of the country's oil wealth.

However the Libyan leader has challenged those claiming he has stashed money abroad to produce evidence of such funds and threatened to "put two fingers in their eye," the BBC reported.

The US government was among the first to act on the UN resolution, announcing it had frozen at least $30 billion in Libyan assets and that further sanctions could be on the way.

"It is the largest blocking under any sanctions programme ever," US sanctions czar David Cohen told reporters.

In Berlin, the German government said it was freezing a bank account held by an unnamed son of Kadhafi containing two million euros ($2.8 million).

"Germany is working hand in hand with the European Union and is on the side of all those pressing for democracy and the rule of law," Economy Minister Rainer Bruederle said.

Announcing its own decision to freeze Kadhafi's assets, Austria's central bank said that Libyan deposits in Austrian banks amount to around 1.2 billion euros.

Austria forged close ties with Tripoli under the leadership of chancellor Bruno Kreisky in the 1970s. He invited Kadhafi to Vienna in 1982 at a time when the Libyan leader was widely seen as an international outcast.

A spokesman at the finance ministry in Italy, Libya's former colonial ruler, said that experts in financial security, led by treasury chief Vittorio Grilli, were set to meet on Tuesday to address the situation in Libya.

Media reports in Rome said the government wanted to stop state funds being diverted to Kadhafi or his cohorts.

The Kadhafi regime has used its oil wealth to acquire a wide-ranging investment portfolio, including a 3.27 percent in Pearson's issued share capital worth around £250 million ($407 million, 295 million euros).

The company said in a statement it had taken the decision after reviewing the UN Security Council resolution and an order imposed by the British government on assets of the Libyan regime.

"Having taken legal advice regarding its obligations under the order, Pearson considers that the ordinary shares in the company which are held by or on behalf of the LIA (Libyan Investment Authority) are subject to the Order and are therefore effectively frozen," the company said.

In addition to the stake in Pearson, the Libyan state invested hundreds of millions of pounds in prime real estate in recent years in Britain.

According to press reports, Libya is part of a consortium which bought a hotel in central London in 2008 for 130 million pounds while Kadhafi's son Saif owns a mansion in Hampstead, one of the most exclusive locations in London.

On Monday, British Prime Minister David Cameron said Britain had frozen "the assets of Moamer Kadhafi, five of his family members, people acting for them or on their behalf, and entities that are owned or controlled by them".

© 2011 AFP

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