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Abdulrahman Benyezza – believes himself to be very much in charge, and is still in Libya |
Regular readers of Euromoney will be familiar with the David and Goliath act under way in the Libyan Investment Authority’s attempts to sue Goldman Sachs and Société Générale for more than $2 billion.
If this was not already challenging enough, it appears that the LIA’s lawyers on the case have walked away from it and that two separate law firms are now claiming to represent the sovereign fund, with each side believing somebody else is running it.
At the heart of the dispute is the fact that two different people in two different countries now believe themselves to be in charge of the LIA, which has about $67 billion of (mostly frozen) assets under management.
Until October 2014, LIA was unified – or about as unified as a fund can be amid a civil war – under the leadership of Abdulrahman Benyezza as chairman. That month, the LIA board removed him.
Two sides
One side believes the LIA is now being run from Malta with Hassan Bouhadi as chairman and Faisal Gergab – head of Libyan Post, Telecommunications and Information Technology Co – also believed to be closely involved. This side has abandoned Tripoli for the moment and works from the LIA’s Maltese subsidiary office.
But Benyezza believes himself to be very much in charge, and is still in Libya.
In May Euromoney spoke to someone within the LIA – Benyezza’s LIA, that is – who, while not wanting to be named, was adamant that business was continuing under Benyezza in Tripoli.
“LIA is still here at its own location, right here on the 22nd floor of the Tripoli Tower, with 130 employees still here who have been in these offices from 2008,” says the source. “We are still in operation.”
And Benyezza is still there? “Absolutely! I see him every day in his office,” he says. “We continue to manage Libya’s assets and maintain control over its subsidiaries; we continue to represent Libya’s government and the Libyan people internationally. The body in Malta has absolutely no control of anything.”
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The confusion appears to have driven off Enyo Law, which had been representing the LIA in the cases against both Goldman and SG throughout the frequent changes of leader (still another, Abdulmagid Breish – see update below – was LIA chairman when Enyo started). Enyo, led by partner Simon Twigden, ceased to represent the LIA as of April 28, according to documents filed with London’s High Court. It has not said why, and did not respond to queries from Euromoney, but it is understood not to be a question of non-payment, but because it is no longer clear who its client is, or how it will proceed.
At the time of writing, two separate law firms were due to face off in London to establish who represents the fund. The Maltese, Bouhani-led side has appointed Keystone Law, which has written to Goldman and SG counsel Herbert Smith Freehills to say that it is “instructed to take over conduct of this action”. This side put out a statement saying that Benyezza’s “repeated assertions of his individual authority to represent the LIA” were “creating a wholly unnecessary impediment to the efficient pursuit of the LIA’s legal claims” against the banks.
Benyezza’s side has appointed Stephenson Harwood, although the source tells Euromoney: “Stephenson Harwood is LIA general counsel in the UK, but has nothing to do with the pending cases against Goldman Sachs and Société Générale.”
This has already caused some embarrassment for Stephenson Harwood, which also sometimes represents SG; the firm (which also did not respond to queries from Euromoney) was prompted to put out a statement on May 13 in both French and English saying it was “honoured [sic] to count Société Générale amongst its clients” and confirming it was “not in charge of the proceedings filed against Société Générale and Goldman Sachs before the High Court of London.”
Struggle
The whole thing is representative of the power struggle taking place within Libya over anything connected to the national finances. It is commonplace at the central bank, too, to find more than one person or institution claiming to be in a position of leadership.
The LIA source in Tripoli says there is a long-standing agreement in place between the European Community, UN and US to keep the Libyan sovereign institutions out of this power conflict, including the LIA, central bank and the National Oil Corporation. In practice, this means the impact on the LIA’s funds will be limited, since most assets are frozen – “at our own request from Tripoli”, as the LIA source says, “out of fear that these funds might be abused.”
But it clearly doesn’t help a complicated litigation against two of the biggest banks in the world. Asked if it is possible for those cases to go ahead, the source said: “I’m not quite sure, to be honest with you. We have a strong case and our chances were looking very good.”
There is plenty at stake. The claim against SG stood at $2.1 billion, and the one against Goldman, $1.2 billion. The dispute will also add to the considerable costs the fund has incurred.
“It is truly unwise to shift counsel in the middle of a case,” says one lawyer familiar with the matter. “They must have already spent a minimum of $2 million on Enyo and it would cost – easily – $500,000 or more to get a new firm up to speed.” Both cases have already undergone detailed pre-trial hearings and are due to be heard next year.
UPDATE: Since this article was written, the situation has changed once again, with a familiar face replacing Benyezza at the top of the Tripoli LIA.
Breish, who was interviewed at length in Euromoney last year, subsequently stepped down while he was investigated for links to the Gaddafi administration, but is back in charge. Breish appeared to be exonerated by the Libyan Court of Appeal on April 13 and was therefore reinstated.
Breish is more bullish about the LIA source about the litigation. “A critical part of the LIA’s work is the pursuit of the litigations, which I initiated against Goldman Sachs, Société Générale and others to recover billions of dollars lost through improper transactions during the Gaddafi regime,” he said in a statement.
“I am aware that, during my absence, there has been an attempt by other persons to take control of the LIA, serving to challenge the independence and neutrality of the organization. I look forward to demonstrating conclusively that their claim is baseless.”
