New Report by The Sentry: Massive Surge in Corrupt, Criminal Operations in Libya Linked to Leaders

Massive Surge in Corrupt, Criminal Operations in Libya Linked to Leaders

 

November 7, 2023 (Washington, DC) — A massive surge of corruption and organized crime in Libya orchestrated by the country’s rulers threatens the survival of essential institutions, is generating cascading regional and international security risks, and could spark major armed conflict, warns a new report released today by The Sentry.

The Sentry’s report, “Libya’s Kleptocratic Boom,” reveals a rapid expansion of illicit enterprises linked to Libya’s leaders, including human trafficking, fuel smuggling, narcotics, money laundering, currency manipulation, financial fraud, and the theft of billions of dollars in public assets.

John Prendergast, Co-Founder of The Sentry, said: “Corruption in Libya has been viewed for too long as an unfortunate but stable internal problem without international security implications. A rapid expansion in the trafficking in drugs, fuel, and human beings and the outright theft of billions of dollars in public assets is transforming the country into a hub of transnational crime and an increasing threat to regional and international security. The country’s kleptocratic rulers, in their reckless pursuit of power and profit, risk destroying their country’s economy and essential institutions and fueling a spiral into full-fledged armed conflict. International community warnings aimed at Libya’s current leaders without utilizing meaningful financial pressure only fuel this dangerous implosion.”

Oliver Windridge, Director of Illicit Finance Policy at The Sentry, said: “Post-2011, Libya was already notable for its myriad armed groups, which, despite their criminality, were accommodated by some in the international community for providing marginal services and a degree of security to local communities. Unfortunately, this strategy of appeasement has contributed to the entrenched influence of militias over state institutions and has provided free rein to plunder public resources. Worse yet, some of the highest Libyan officials have now adopted similar tactics. When engaging with Western powers, senior Libyan politicians and technocrats portray themselves as invaluable allies, promising collaboration on issues like terrorism, irregular migration, and hydrocarbon production. In fact, some of Libya’s leaders are at the heart of an array of brazen, multibillion-dollar criminal ventures. The US and other like-minded countries must show they are prepared to confront this accelerating threat by employing hard-hitting policy measures, including targeted network sanctions.”

Selected report excerpts:

• The devastating loss of life and property from the September 2023 floods in Derna and other northeastern Libyan areas only confirms the current Libyan leaders’ neglect of significant portions of their nation’s economy and their indifference to crumbling infrastructure.
• While international players have been vocal in their public criticism of the corruption and criminality of Libya’s ruling elite, their actions have done little to ameliorate the growing trends of kleptocratic accumulation.
• The incumbent leaders’ stranglehold on the state provides clear evidence that Libya is deteriorating rapidly and heightens the likelihood that the troubled nation will remain a volatile security environment and potential source of broader instability.
• There is a substantial risk that Libya’s current leaders might end up destroying the country’s most essential institutions, including the National Oil Corporation (NOC), which is responsible for almost all of the nation’s income.
• The narcotics business in Libya is dominated by the fast-growing trade in three products: cannabis, a synthetic amphetamine called captagon, and cocaine. While the cocaine usually originates from Latin America, most of the cannabis comes from Morocco and most of the captagon from regime-held Syria. Some Libyan state officials abuse public mandates and public resources to participate in or assist the illicit drug trade.
• The role of mercenary groups such as Russia’s Wagner Group and Turkey’s Uluslararası Savunma Danışmanlık İnşaat Sanayi ve Ticaret A.Ş. (SADAT) expanded amid Khalifa Haftar’s offensive on Tripoli from 2019 to 2020. After being attacked by Haftar’s armed coalition, the United Arab Emirates, Russia, and others, the then-Tripoli-based Government of National Accord signed a defense memorandum of understanding with the Turkish government, inviting the permanent presence of Turkish military personnel and Syrian mercenaries. After June 2020, many of these foreign personnel remained in Libya, despite it no longer being an active war theater.
• Since 2011, the UAE, Turkey, and Jordan have routinely violated the UN Arms Embargo, while armed groups from neighboring Sudan and Chad have been employed extensively by Libyan factions.
• Political leaders and state officials engage in horse-trading with their rivals, dividing public offices and access to budgets in return for claimed commitments to upholding “stability.” Many armed groups do provide the day-to-day security that the Libyan public needs, yet they simultaneously engage in corrupt and criminal activities, as well as human rights abuses against any Libyans who oppose those activities. Together, these kleptocrats have consolidated their control over the state’s resources and risen to dominate Libya’s thriving illicit markets. Increasingly, the distinction between armed groups and political leaders is harder to draw.

 

Key recommendations (Read the full report for more detailed policy recommendations):

The Sentry’s report presents hard-hitting policy recommendations for governments, banks, and international institutions to aid in curbing the explosion of kleptocratic activity.

1. Lift the veil of complicity, both domestic and international.
   The US, UK, EU, and other like-minded governments should be creative and proactive in considering all available tools of pressure. The issuance of advisories by the US, UK, and European governments to highlight the risk of exposure to fraudulent practices—particularly when it comes to correspondent banking—should be considered for the sectors of the Libyan economy identified in this report. Financial regulators in these jurisdictions should also ensure that the relationships of Libyan state institutions and the banking entities they oversee are at arm’s length. Magnitsky-style sanctions regimes, as well as visa bans passed through separate legislation, should be developed and targeted at the leaders involved in corrupt activity.
2. Shift away from the current extractive governance system.
   International mediation has continued to pursue a bargain among the political elite presently in power rather than develop a more inclusive process that lets a larger portion of the population influence the manner in which the nation should be governed. This would involve removing the monopoly over decision-making that Libya’s kleptocrats currently enjoy. International efforts to reunify institutions must continue to be supported. Direct assistance to state institutions, facilitated through multi-donor vehicles like the cross-ministry Recovery and Peace Building Assessment, should be predicated on clear benchmarks for institutional reform that outline progress during specified periods. The international community—both bilateral donor governments like the US and UK, as well as multilateral institutions such as the World Bank and the International Monetary Fund (IMF)—should work with Libyan authorities on these benchmarks and help to ensure compliance.
   
3. Ensure that public funds lead to public good, not private enrichment.
   It is imperative that checks and balances within the Libyan state system are bolstered and that the senior management of Libyan institutions is held to account. The international community should provide technical support and political encouragement to produce accountable and transparent committee procedures, conditioning international support for development projects upon satisfaction of this criteria. International mediation efforts should be complemented by sector-specific initiatives. In the financial sector, in particular, leverage for reform should be built through banking pressure. Based on existing UN resolutions, the US should contribute to disrupting the business model of fuel smuggling networks. Western nations should also work closely with the top leadership of the NOC, Libya’s attorney general, the Libyan Audit Bureau, and other Libyan watchdogs to contain and regulate oil-for-fuel swaps by instituting a more rigorous framework for financial reporting. Additionally, there is a critical need for greater transparency in government contracting. While politically challenging, supporting a transparent public tender process—perhaps initially via joint projects between international donors and the Libyan government, like the cross-ministry Recovery and Peace Building strategy—would deal a blow to kleptocratic accumulation.
   
4. Tackle the culture of impunity that exists for those who systematically violate human rights.
   The International Criminal Court retains jurisdiction in Libya, and a UN fact-finding mission launched by the UN Human Rights Council remains an avenue for investigating and holding to account human rights abusers. Meanwhile, the atmosphere for human rights defenders has become increasingly difficult, with arrests under the pretense of protecting “Libyan and Islamic values” becoming increasingly commonplace. Such abuses must be clearly called out and the forces perpetrating the arrests named and shamed, even if they do cooperate with Western agencies on issues of counterterrorism and migration.

 

 

Read the full report by The Sentry, “Libya’s Kleptocratic Boom”: https://thesentry.org/reports/libyas-kleptocratic-boom

For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, [email protected]

 

About The Sentry
(Short descriptor for press use: “The Sentry, an investigative organization that tracks corruption”)

The Sentry is an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy. Pull back the curtain on wars, mass atrocities, and other human rights abuses, and you’ll find grand corruption and unchecked greed. These tragedies persist because the perpetrators rarely face meaningful consequences. The Sentry aims to alter the warped incentive structures that continually undermine peace and good governance. Our investigations follow the money as it is laundered from war zones to financial centers around the world. We provide evidence and strategies for governments, banks, and law enforcement to hold the perpetrators and enablers of violence and corruption to account. These efforts provide new leverage for human rights, peace, and anti-corruption efforts. Learn more: www.TheSentry.org