Libya’s apex Bank missing billions in new bills

A leaked financial review has revealed that Libya’s Central Bank in Tripoli failed to provide an account for the delivery of local dinar banknotes worth $4.8 billion from a British printing company. The findings have raised concerns about the whereabouts of the money and have cast doubts on the bank’s transparency and integrity.

The review also highlighted another concerning development, as the central bank controlled by the rival government in eastern Libya engaged a Russian state-owned company to print its own parallel currency. This move resulted in significant debt for the administration, as the currency lacked backing by gold or any other collateral.

These revelations are part of two “confidential” reports commissioned by the United Nations in 2018 at the request of the then Libyan Prime Minister, Fayez Al Sarraj. The reports aimed to restore trust and transparency in the Libyan financial system and create conditions for the unification of financial institutions.

Libya’s civil war has led to the emergence of competing administrations, each claiming legitimacy over public institutions, including central banks. The financial reviews, covering the period from 2014 to 2020, expose potential regulatory violations by central banks on both sides of the conflict.

The leaked review disclosed that a major discrepancy exists between the amount of currency the Tripoli Central Bank should have received from De La Rue, a UK-based company that won a currency printing contract in 2012, and the amount recorded in receipts issued by the bank. According to Deloitte, the financial consulting firm behind the review, approximately 6.5 billion dinars (equivalent to $4.8 billion) remain unaccounted for.

Experts have expressed concerns about the magnitude of the missing currency and its implications. Patrick Bond, a political economist at the University of Johannesburg, highlighted the potential “dubious practices” of De La Rue, which holds currency printing contracts with several African central banks. Andrew Feinstein, the executive director of anti-corruption group Shadow World Investigations, raised the essential question of where the printed cash had gone.

Efforts to obtain comments from the Finance Ministry and Central Bank in Tripoli were unsuccessful, with no responses to email inquiries and non-functional phone numbers. Deloitte acknowledged the limitations of their findings, stating that they were unable to conclude or determine whether any fraud or misappropriation of assets had occurred based on the documentation provided by the central banks.

The financial review also exposed irregularities in the eastern Libyan administration’s central bank. The Bayda-based Central Bank, under the control of Khalifa Haftar’s rival government, commissioned the Russian state-owned Joint Stock Company Goznak to print its own version of the Libyan dinar. The contract cost over $121 million, with each note being charged at approximately $6, far higher than the usual cost for governments. Additionally, the Bayda Central Bank lacked collateral, such as gold reserves, resulting in the issuance of currency not backed by tangible assets, a violation of Libya’s Banking Act.

The Deloitte reports shed light on the mismanagement of funds, with the unbacked currency accounting for a significant portion of eastern Libya’s undisclosed debt. The lack of financial discipline and the decision to print currency without intrinsic value may have long-term repercussions, similar to countries with devalued currencies like Argentina.

Critics argue that these financial reports, which implicate corrupt armed groups and political factions, should have been made public. Anas El Gomati, founder of the Sadeq Institute, emphasised the importance of transparency and expressed concern over the concealment of vital financial information from the Libyan citizens who have endured years of corruption and conflict.