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The Libyan Investment Authority’s multi billion-pound claims against Goldman Sachs and Societe Generale, both of which underwent pre-trial hearings in late 2014 and are due to go to trial next year, may be undermined by increasingly fractious infighting at the $67 billion fund.
This week two separate law firms – neither one of them Enyo Law, which had represented the LIA in its litigation until April before stepping away from their client – are due to face off in a London court, with each representing a different faction that claims to control the fund.
The side receiving most media attention in the west is backed by the Tobruk government – Libya effectively has at least two – and is being run from Malta under the leadership of Hassan Bouhadi as chairman alongside Faisal Ahmed Gergab. This side has appointed the law firm Keystone Law.
But the other side is led by Adbulrahman Benyezza and remains in Tripoli. Benyezza was – according to the Maltese side – removed by the LIA board in October, but Emerging Markets has spoken to a representative who insists that he continues to run the fund from Tripoli.
“Lia is still at its own location, right here in the 22nd floor of the Tripoli Tower, with 130 employees still here who have been in these offices from 2008. We are still in operation,” said the source in the LIA, who asked not to be named. And Benyezza is still involved? “Absolutely! I see him every day in his office.
“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.”
This side is understood to be represented by Stephenson Harwood, though neither that firm, Keystone nor Enyo responded to written queries from Emerging Markets.
The spat is representative of the power struggle within Libya within which many institutions, including the central bank, have more than one group or individual claiming to lead them. The LIA source said that there had been a long-standing agreement between the European Community, UN and US to keep the Libyan sovereign institutions outside of this power conflict, including the LIA, National Oil Corporation and the central bank.
In one sense the impact of the dispute is limited because the vast majority of LIA assets remain frozen – “at our own request from Tripoli,” the source said, “out of fear that these funds might be abused.” But it runs a serious risk of torpedoing the fund’s complex challenge against the western banks.
Asked if it was 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.” He said that the previous counsel, Enyo Law, led by partner Simon Twigden, had stepped away not because of non-payment but because “it was not clear to them who their client is at this stage.”
The Maltese camp of the LIA said in a statement it has instructed Keystone “for a speedy resolution of a threatened challenge to the authority of the LIA’s board and chairman by Benyezza”, whose “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.
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.”
