FT BeyondBrics: Ousted head of Libyan Investment Authority speaks out

FT BeyondBrics, April 8 2013

The departing chairman and chief executive of the Libyan Investment Authority has said he was about to appoint lawyers to seek compensation from banks including Société Générale and Goldman Sachs – banks he has accused in the past of causing losses worth billions of dollars.

In a wide-ranging interview published in Euromoney magazine, Mohsen Derregia (pictured), who is being ousted from the LIA after just 11 months in the top job, speaks passionately about his removal – which he is challenging – and the importance of the approximately $60bn sovereign fund.

“I want the government to understand that in the new Libya, even if you have the power, you must act within the boundary of law, of rules and regulations,” he says. “Otherwise, we shouldn’t have gone out on February 17 and deposed Gaddafi. Because it’s going to be exactly the same.”

To see the article as it ran in the FT, click here:

Revelations in the interview include:

• Derregia says the LIA “had identified four names” of institutions that had sold structured investments to it which fared extremely badly during the global financial crisis, which were “potentially litigation areas”. Derregia was about to sign two law firms “that would take on and seek resolution to what we believe are unfair deals. Hopefully amicably, but possibly with court action.” Among the banks are Société Générale and Goldman Sachs, both of which declined to comment.

• Derregia puts the total assets of the LIA at around $60bn, but notes they are exceptionally difficult to value accurately because their book value may not reflect their actual worth. He says about 95 per cent of LIA assets remain frozen, mainly by the UN, though he adds that after his appointment last April he not only welcomed UN restrictions on funds but asked for their extension.

• He refers to severe interference in trying to assemble a board free of conflicts of interest, saying that interested parties “would resist very hard, in unimaginable ways.” He speaks of “dealing with people working against you, continuously trying to stop what you are doing, even though what you are doing is not a personal thing but what needs to be done to make the LIA a strong institution.” He adds: “It needs five to seven years. I don’t understand what basis there is for wanting to change what happened in the last year. This is going to be lost effort: not to me, but to the LIA and to Libya.”

• He says of the LIA at the time of his arrival: “There were decisions made by phone calls on behalf of the board for powerful people like Seif Gaddafi and his dad; all kinds of ad hoc investments that did not really fit the profile of the LIA.” Of the group’s mysterious subsidiaries, he adds: “You ended up with hundreds of companies doing all sorts of activities. Anything you could name could be in the portfolio. It was a huge mess.”

• Derregia says he received a letter informing him he would be replaced on February 10, but was not contacted about the handover process until March 15. He says he has asked the National Audit Office to review all transactions under his tenure, and claims LIA assets went up by $1bn under his watch.

In the short term, his replacement will be Ali Mohamed Salem Hibri, deputy governor of the Central Bank of Libya.