HSBC and Royal Bank of Scotland were among major global banks which held billions of dollars of Libyan state funds, a leaked report reveals.

 

The world's biggest banks led by France's Société Générale, and including Goldman Sachs and Nomura, were involved in $5bn (£3.1bn) of deals involving Libya, according to an internal report for the Libyan Investment Authority obtained by UK campaign group Global Witness.

It reveals the scale of the banks' involvement with Muammar Gaddafi's regime. Many of the LIA's assets have been frozen under international sanctions since February.

 

The document, dated June 2010, outlines where Libya's oil riches of $53bn were invested. HSBC held $293m in 10 cash accounts, and invested $275m in a hedge fund, while another $110m of Libyan money was invested in a private equity fund managed by RBS. Goldman Sachs had $44m in four cash accounts.

The report shows that almost $4bn was held in investment funds and structured products with banks and hedge funds, with Société Générale alone holding $1bn, while JP Morgan Chase had $171m and the New York hedge fund Och-Ziff $329m.

The bulk of the LIA's deposits – $19bn – was held by Libyan and Middle Eastern banks, however, including the Central Bank of Libya, the Arab Banking Corporation and the British Arab Commercial Bank. The report shows that Libya suffered heavy losses on the investment products sold by global banks – one of the most eye-catching losses was a 98.5% fall in the value of the sovereign wealth fund's $1.2bn equity derivatives portfolio.

HSBC and RBS refused to comment, citing client confidentiality.
"It is completely absurd that banks like HSBC and Goldman Sachs can hide behind customer confidentiality in a case like this. These are state accounts, so the customer is effectively the Libyan people and these banks are withholding vital information from them," said Charmian Gooch, director of Global Witness. She called on governments to force banks and investment managers to disclose the state-owned funds they manage.
 

The Libyan authority held $5.2bn in shares and $3.4bn in bonds. The document outlines the stakes owned by the sovereign wealth fund in global companies such as BP, General Electric, Vivendi, Citigroup and Deutsche Telekom. It has already been reported that the fund owned chunks of Italy's UniCredit bank, industrial group Finmeccanica, UK publishing group Pearson, owner of the Financial Times, and telecoms company Vodafone.

 

The Gaddafi family has significant personal control over the state funds invested in the LIA. According to the prosecutor of the international criminal court: "Gaddafi makes no distinction between his personal assets and the resources of the country."