The British Member of Parliament (MP), Tom Tugendhat, criticised the recent meeting between the Governor of the Bank of England, Andrew Bailey, and his Libyan counterpart, Al-Siddik Al-Kabir, “who is a well-known financier of militias and gangsters,” as he put it.
He accused Bailey of “lending legitimacy” to Al-Kabir after he met with the controversial Head of the Central Bank of Libya (CBL), according to Express News.
It has emerged Bailey met with the CBL Governor Al-Kabir, on July 1st which has been the subject of a damning report. Tugendhat blasted the meeting for “seeming to endorse the practices of a troubled organisation.”
Tugendhat said, “Bailey has met with a man who has overseen an institution beset by fraud. London has been the epicenter for this enterprise for years.
“It is clear public money flows out of Libya, into London banks, and into the hands of gangsters and militias,” he added.
“To meet with a man like this is deeply unwise, it raises questions over the judgement of the Bank of England,” Tugendhat explained.
The report by Global Witness highlighted the widespread use of Letters of Credit (LCs), which “distributes around $9 billion worth of foreign currency to businesses and public authorities every year.”
LCs are essentially a means of exporting cash, turning Libyan dinars into dollars, euros, pounds and other currencies which can be spent overseas. While indispensable to meeting Libya’s import needs, the LC system has long been plagued by fraud and predation by armed groups.
The report found London, home to dozens of Libyan banks, played a key role in the operation, “Global Witness set out to examine the LC money trail, which stretches from the Central Bank of Libya CBL to Libyan-owned banks in the heart of London.”
The report also found how the CBL oversees widespread fraud domestically.
It noted, “a former employee of the CBL, described how meat and livestock imports were routinely manipulated. Importers would either falsify customs declarations by documenting more meat than was actually shipped or import animals weighing less than the legal minimum.”
“The original exporter invoices could be altered by inserting a shell company middleman in the deal. Either way the Libyan public foots the bill, handing out more foreign currency than the imported meat is worth,” the report added.
“Several Global Witness sources believed these arrangements facilitated accumulation of funds overseas to provide financing for other purposes, such as import of goods not currently covered by the LC regime, reinvestment in Libya’s parallel FX markets, or even procurement of weapons or other logistical support for the combatants fighting the civil war,” the report concluded.