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LA STAMPA

Big Chunks Of Gaddafi's Stash Of Oil Wealth Went Into Italy -- And Bad Investments

An overview of the Libyan sovereign wealth fund's bad moves, including investments in some of Italy's top firms such as energy giant ENI and industrialist Finmeccanica

Libya invested heavily in Italy's Unicredit bank (Hugo)
Libya invested heavily in Italy's Unicredit bank (Hugo)
Francesco Manacorda

MILAN - The real mystery of Libya's oil treasure seems to be how much of it has been squandered by disastrous investments. The anti-corruption organization Global Witness has published on its website a detailed report, originally dated June 30 2010, about the troubled investments of Libya's sovereign wealth fund, the Libyan Investment Authority (LIA).

Currently, a UN resolution has frozen the assets of LIA, which owns a 2.6% share of the Italian bank Unicredit, a 2% share of the Italian oil and gas company ENI and a 1% share of the Italian industrial and hi-tech group Finmeccanica.

But from the report, it seems that LIA's investments should have been halted long before. While most sovereign fund managers tend to be highly professional investors, the LIA seemed to have another approach. One-third of its capital, $19 billion, was kept in deposits, while risky investments and huge mistakes were made with the rest.

During the quarter between April and June 2010, LIA's total asset dropped by 4.53%, from $55.8 billion to $53.3 billion. Not too bad, considering that the equity and currency derivatives portfolio's value plunged by 98%, from $1.24 billion to $20 million.

An investment of $1.8 billion set up by the French bank Société Generale left only $284 million. Stock options and assets were even more disastrous. An equity derivative investment in ENI lost 99% of its value. One with Unicredit lost 99.5%. A contract signed with Citgroup, which cost $100 million, left only $500,000.

Libya's good relations with Italy were clear from the sovereign fund wealth's portfolio. Almost 24% of LIA's investments were with Italian companies. Germany was the second partner, the US was the third and the UK the fourth leading partner.

Some of the biggest global fund managers worked with Gaddafi. LIA had structured product investments with HSBC, Commerzbank and Paribas, as well as private equity funds Carlyle, RBS and Goldman Sachs. Ironically, the Libyans were happy to help fuel Washington with financing. Two-thirds of LIA's $3.4 billion of bonds investment were invested in US government bonds.

photo - Hugo

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Economy

Lex Tusk? How Poland’s Controversial "Russian Influence" Law Will Subvert Democracy

The new “lex Tusk” includes language about companies and their management. But is this likely to be a fair investigation into breaking sanctions on Russia, or a political witch-hunt in the business sphere?

Photo of President of the Republic of Poland Andrzej Duda

Polish President Andrzej Duda

Piotr Miaczynski, Leszek Kostrzewski

-Analysis-

WARSAW — Poland’s new Commission for investigating Russian influence, which President Andrzej Duda signed into law on Monday, will be able to summon representatives of any company for inquiry. It has sparked a major controversy in Polish politics, as political opponents of the government warn that the Commission has been given near absolute power to investigate and punish any citizen, business or organization.

And opposition politicians are expected to be high on the list of would-be suspects, starting with Donald Tusk, who is challenging the ruling PiS government to return to the presidency next fall. For that reason, it has been sardonically dubbed: Lex Tusk.

University of Warsaw law professor Michal Romanowski notes that the interests of any firm can be considered favorable to Russia. “These are instruments which the likes of Putin and Orban would not be ashamed of," Romanowski said.

The law on the Commission for examining Russian influences has "atomic" prerogatives sewn into it. Nine members of the Commission with the rank of secretary of state will be able to summon virtually anyone, with the powers of severe punishment.

Under the new law, these Commissioners will become arbiters of nearly absolute power, and will be able to use the resources of nearly any organ of the state, including the secret services, in order to demand access to every available document. They will be able to prosecute people for acts which were not prohibited at the time they were committed.

Their prerogatives are broader than that of the President or the Prime Minister, wider than those of any court. And there is virtually no oversight over their actions.

Nobody can feel safe. This includes companies, their management, lawyers, journalists, and trade unionists.

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