“Deepening descent” into corruption in Libya, “parallels with Syria”

NEW INVESTIGATIVE REPORT:
After Horrific Dam Disaster, Corruption Threatens Libya’s Derna Again

• Surge of high-level corruption and reliance on foreign patrons in Libya parallels vulnerabilities that led to collapse of Assad regime in Syria
• Red flags for corruption in Derna reconstruction project controlled by Field Marshal Khalifa Haftar
• Report urges critical actions to address the complicity of enablers in the United Arab Emirates, Turkey, and Egypt

December 12, 2024 (Washington, DC and Brussels) – Amid a powerful rainstorm in 2023, two dams in eastern Libya collapsed. The resulting flood virtually erased downtown Derna and likely killed more than 12,000 people.

A new investigative report published today by The Sentry sheds light on the corrupt operations that contributed to the deadly disaster and reveals new greed-driven schemes in Derna’s ongoing reconstruction that could lead to yet another catastrophe. The report further urges critical actions to address the complicity of enablers in the United Arab Emirates, Turkey, and Egypt—all countries that are strategic partners of the United States.

Charles Cater, Director of Investigations at The Sentry, said: “The Dabaiba family, who now holds power in Tripoli and who previously oversaw Libya’s public works sector during Qadhafi’s rule in the 2000s, bears responsibility for mismanaging crucial infrastructure contracts, including a gross lack of maintenance of the Derna dam. Their misconduct contributed to the tragic catastrophe in Derna, which destroyed a historic city and killed thousands. Now, the ongoing reconstruction of Derna presents similar risks. With Field Marshal Haftar and his family controlling the rebuilding process, there are renewed signs of abuse and fund misappropriation. The secret deal-making and opaque operations of the Haftars should raise red flags for corruption and renewed concerns for infrastructure integrity.”

Oliver Windridge, Director of Illicit Finance Policy at The Sentry, said: “International policymakers should require maximum transparency from the reconstruction funds managed by Field Marshal Khalifa Haftar’s faction in eastern Libya, insisting that they submit to oversight from legitimate Libyan financial institutions like the Audit Bureau. More broadly, law enforcement and financial authorities in the US, UK, Europe, and in other nations with an interest in supporting a more stable, secure region should help investigate the past misappropriation of Libyan infrastructure funds, work to return these resources to the Libyan people, and step up efforts to counter a deepening descent into kleptocracy.”

In a series of reports and news articles, including in a major investigative report “Libya’s Kleptocratic Boom,” The Sentry has exposed a rapid escalation of corruption, looting, and organized crime perpetrated by Libya’s current rulers involving the country’s essential institutions, including the nation’s vital oil sector. Experts at The Sentry have warned that unless bolder international policies are adopted, Libya could relapse into armed conflict.

Charles Cater, Director of Investigations at The Sentry, added: “The rapid collapse of Assad’s regime in Syria this month has seized global attention, and similar dysfunctional factors are at work in Libya—particularly in the east. Under the Haftar family’s authoritarian rule, heavy reliance on foreign patrons parallels Syria’s vulnerabilities, while the security apparatus often prioritizes illicit financial gains over genuine security. As Russia’s influence in Syria recedes, the corridor once linking Syria’s coast to eastern Libya—crucial for Haftar—now faces growing uncertainty. These similarities underscore the urgency of examining Libya’s reconstruction efforts and the politics shaping them.”

Overview of key policy recommendations
(For full detailed recommendations, see the report)

For the United States and other likeminded countries:

• Resist any perpetuation of the current system of dual dynastic kleptocracy in Libya. Instead, nations committed to reducing corruption in Libya should intensify pressure on both ruling families, as well as their closest business associates. This anti-corruption objective should be pursued even though US partners in the region such as Turkey, Egypt, and the UAE remain indulgent towards Libyan corruption.
• Actively engage in discussions with the Central Bank of Libya’s leadership regarding Derna’s reconstruction. Haftar-sponsored contracts should be appropriately vetted through all existing oversight mechanisms and international stakeholders should urge the CBL leadership to increase transparency and accountability for reconstruction expenditures, which might otherwise bypass the ministries in Tripoli and all oversight bodies.
• Support the Audit Bureau, in exchange for their increased scrutiny of both past and present infrastructure-related corruption schemes. The US should enhance USAID’s existing cooperation with the Audit Bureau, potentially including funding for its partnerships with international audit firms.
• Promote accountability and transparency in development spending beyond Derna.
• Pair calls for increased transparency from Libyan leaders with targeted sanctions against those leaders’ closest associates and facilitators in the illicit realm.
• Support credible civil society organizations aspiring to mobilize the skills and efforts of Derna natives who live elsewhere in Libya and beyond.
• Investigate fraud, where possible. Given the Dabaiba family’s involvement in the Derna dam scandal, the United Kingdom should reinvigorate its decade-old investigation into ODAC-related fraud.

For the UN Security Council:

• Maintain existing sanctions on Libyan Investment Authority assets until the sovereign wealth fund complies with the Santiago Principles by providing comprehensive accounts.

For international banks:

• Exercise increased vigilance. To avoid inadvertently facilitating Libyan corruption, foreign banks should scrutinize all transactions related to reconstruction, applying stringent anti-money laundering (AML) measures and focusing not only on members of the Haftar family but also on their enablers.

For Libya’s ministries, agencies, and other public institutions:

• Digitize the registry of private companies and make it publicly accessible.
• Launch a national taskforce dedicated to surveying existing infrastructure from a maintenance perspective.

 

Read the new report: https://thesentry.org/reports/corruption-libya-derna/

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

 

For media inquiries, 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 at: https://TheSentry.org