* NTC document reveals huge sums of cash were unaccounted
* Leadership kept in dark about own assets, spending
* Officials say problem is miscommunication, not theft
* Chaotic finances allow graft to thrive: campaigners
By Ali Shuaib and Christian Lowe
TRIPOLI, May 8 - Months after rebels brought
down the extravagant dictatorship of Muammar Gaddafi, the
disarray in Libya's state finances at the end of last year was
so bad the new leadership did not know the size of state assets,
how their money was being spent, or what had happened to more
than $2 billion transferred from the sovereign wealth fund.
An internal National Transitional Council (NTC) document
paints a picture of a government bureaucracy so fractured and
disorganised that nobody appeared able to keep track of what
money was coming in, and how much was going out.
Libyan officials say the anomalies in the state's finances
revealed in the document were the result of complex accounting
rules, delays in settling bills and poor communication between
government departments - not by money being misused or stolen.
But campaigners for financial transparency say that the
disarray in tracking government finances creates a fertile
environment for abuse to occur, particularly when Libya is now
earning over $2 billion a month from selling crude oil.
"The proper management of public finances, especially oil
revenues which make up 90 percent of government revenues, is
crucial," said Giulio Carini, a campaigner with the
international anti-corruption group Global Witness.
"Any lack of transparency and accountability... fuels
mistrust and suspicion that the interim and any future
government of Libya is not taking the necessary steps to reverse
the past legacy of mismanagement."
Libya has lacked a strong, central government since the
rebellion, backed by NATO jets and missiles, ended Gaddafi's
42-year rule last year.
International concern about the new Libya has focused on
security issues: out-of-control militias clashing with each
other, weapons being smuggled across poorly-secured borders, the
threat of Libya splitting into regional fiefdoms.
But there is another risk too, that in the muddle of the
transition in Libya, millions and possibly billions of dollars
in state assets could be misappropriated.
The NTC document, which was obtained by Reuters, relates to
state finances several months back, under a government that has
since been replaced. Nevertheless, high-profile corruption
scandals since then indicate that the government's shortcomings
with keeping track of money have still not been resolved.
In November last year, the NTC's economy and finance
committee, which provides oversight over the work of the interim
government, submitted an internal report on the activities of
the oil and finance ministries, the central bank and the
sovereign wealth fund, the Libyan Investment Authority (LIA).
The seven-page report was dated 27. Nov, 2011. It listed a
litany of accounting holes, and failures by branches of the
government to share information about the cash they were
In one passage, the report's authors said they needed more
information to understand how the central bank calculated the
$139.9 billion it said Libya held in assets abroad.
"The question is: what is the size of deposits and
investments for the central bank alone?" the report asked.
In another section, it took the oil and finance ministries
to task over their lack of transparency.
"The (oil and finance) department has not provided monthly
reports identifying sources of available financial revenues,
their use and the way cash balances are being dealt with," it
The two ministries had "not provided reports on oil export
shipments and the amounts collected in return and how the
amounts were spent."
It said also it had received no details on who in the public
sector had been paid their wages and how much they were paid.
The NTC said in the document it had reports of "ambiguity"
surrounding sales of foreign currency and contracts concluded
with brokers and currency traders.
In a different section, the report's authors addressed the
LIA. The document queried $2.456 billion which the LIA said it
had handed over to the treasury, but had, it seemed, not shown
up on the government's books.
"When have they (the LIA monies) been transferred to the
treasury, how have they paid and to whom have they been paid?"
the report asked.
The NTC complained that the sovereign fund was keeping it in
the dark on other issues as well. It said the fund provided it
with no details on assets held in stocks, bonds or investment
funds, including those funds which had registered
In the report, the NTC committee said it had no information
on why the LIA's assets had shrunk. "Total (LIA) resources after
2010 allocations were $65 billion, how did it become $62.956
billion?" the report asked.
MONEY "NOT MISUSED"
Asked to comment on the short-comings raised in the report,
NTC spokesman Mohammed al-Harizy acknowledged that
"communication is very weak between the NTC and the government."
He said the NTC had set up a special oil committee, which
started work in April, to improve oversight over crude exports
and the revenues earned.
Harizy said there was "no control over the international
investments," and government schemes to provide assistance to
people who fought Gaddafi in last year's revolt have seen cases
of corruption at local level.
But at the ministry level, he said: "I don't think the money
is being misused ... The oil revenue is turned over to the
finance ministry right away so I don't think there are
Asked about the allegations of "ambiguity" with currency
transactions, central bank deputy governor Ali Mohammed Salem
said: "We had to sell dollars at a low price in order to bring
the cash flow back into the banks."
An LIA official, Mohsen Derregia, told Reuters the authority
could not immediately comment on the NTC document.
Ibrahim Belkheir, the head of the Libyan government audit
bureau, said his office had looked into the issues raised in the
report, including the LIA's financial statements, but he said he
could not disclose his findings.
He said though that most of the apparent financial
discrepancies raised in the report could be explained by routine
delays between oil export shipments being delivered and payment
Belkheir, an academic before the revolt, has been given a
leading role in trying to ensure that the pervasive corruption
under Gaddafi does not carry over into the new Libya.
Already there are signs of graft. In one case, the
government had to halt a scheme to give cash to people who
fought in last year's rebellion because the money was being paid
out to people who were dead or who never fought.
In another scam, fraudsters enjoyed state-funded vacations
abroad by claiming to be wounded veterans of the fighting
needing treatment in foreign hospitals.
The corner office where Belkheir works is steeped in
symbolism. It was previously used by Hannibal Gaddafi, a son of
the ex-Libyan leader famous for his extravagant lifestyle and
raucous parties in five-star European hotels.
Belkheir said his organisation would root out corruption
wherever it found it and had not faced any interference from the
new authorities. But he acknowledged he faced a huge task.
"Corruption is not easy to uproot. It is a cultural issue
that is prevailing among certain people," he said. "As they are
so used to it, it does not seem to be corruption to them."