The Decibel - How a former Libyan dictator’s money ended up in Canada

Episode Date: August 30, 2023

Moammar Gadhafi, former Libyan dictator, has had billions sitting in Canadian bank accounts for almost 12 years after his death. This has caused further investigations and questions in terms of what this means for the Canadian banking sector.Rita Trichur is The Globe’s Senior Business Writer and Columnist joins us to discuss Gadhafi, his family, and all of his money sitting in Canadian banks.Questions? Comments? Ideas? Email us at [e-mail]

Recent reporting from the Globe and Mail has found that a former Libyan dictator stashed billions of dollars in Canadian bank accounts. Muammar Gaddafi ruled Libya for more than four decades. And over that time, he stole as much as $200 billion U.S. from the Libyan people. Muammar Gaddafi rose to power as Libya's leader during a bloodless coup in 1969. In toppling King Erdras, he became the youngest world leader. His style, often quirky and flamboyant. For much of his more than 40 years in power, Gaddafi was at odds with the U.S. and other Western governments, relations deteriorated in the 1970s. During the Arab Spring protests, in 2011, Gaddafi was killed.

But his wealth remained, including billions hidden in Canada. Rita Tricher is The Globe's senior business writer and columnist, and she's been digging into this. Today, she joins us to explain what we know about how Gaddafi's money ended up in Canadian banks. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Rita, thank you so much for being here today. Thanks for having me. So I know there's a lot going on in this story.

There's a lot of different parts. So I thought maybe we could just start off by having you maybe set the stage a little bit. In broad terms, what is this story really about? So this story is about how Muammar Gaddafi, the late Libyan dictator, used Canada as a place to hide billions of dollars of stolen state assets from Libya. But it's also a story about Canada's place in the world, about the effect of its foreign policy, because Canada played a leading role in the NATO intervention that helped to oust Mr. Gaddafi back in 2011. But it's also a tale about how dictators, kleptocrats, and other financial criminals have used and continue to use Canada

as a safe haven to stash, hide, and launder misappropriated funds. Okay. So there's a few different threads here that we're going to tease out, but let's stick with this last one for a moment. Muammar Gaddafi was believed to have misappropriated and hidden funds in Canada. So Rita, what did you find out specifically about that situation? So this revelation that he stashed billions of dollars in Canadian financial institutions throughout his time as a we know that the United Nations imposed sanctions against him and members of his family and officials in his regime. And we know at that time that Canada froze about $2.3 billion in assets belonging to him, his family, and the Libyan government. But we were also told later that same year that all of those assets were unfrozen. Canada also launched an investigation to find out the full extent of the money that he had here in Canada. But we haven't heard much about it since.

And so this revelation, which came from the former Libyan ambassador to Canada, that Muammar Gaddafi continues to have billions of dollars stored in Canadian financial institutions almost 12 years after his death, that is new information that I hadn't heard previously. Okay. What specifically, Rita, are these new revelations that you found? So these revelations from Fatih Baja, who served as Libya's ambassador to Canada from 2013 to 2017, are interesting because he revealed to me earlier this year that he kept confidential financial documents that contained the details about this money in Canadian bank accounts. And after he was fired from his job in 2017, he took those documents with him back to Libya. He lives in Benghazi. And he hid them. And he has said that he is going to

keep that information private. He's going to going to keep that information private. He's going to continue to safeguard that information until his country, Libya, has a democratically elected government. He is worried that the money that has been traced to Mr. Gaddafi in the Canadian financial institutions risks falling into the wrong hands because Libya currently does not have a democratically elected government. Right. How much money are we talking about?

Well, he refused to provide specifics when I pressed him on an exact sum. But he told me in, you know, follow up messages that that there were billions of dollars and that he said during our interview, we're talking about a billionaire. And when we're talking about this money coming from the people of Libya, is this essentially like money the government took in as taxes? Do we know how the government, I guess, got this money? So Mr. Gaddafi, during his time at the head of the Libyan government, maintained this iron-fisted control of the state, its institutions. He treated state funds and state assets as personal assets. There was, we know that he intermingled the two, that there was no division of his own personal fortune and state money. And so because of that, you know, we don't know exactly the full scale of his fortune and how much, you know, was stolen.

We know that a lot of the that there weren't a lot of records and what records did exist have since disappeared. OK. All right. So let's take a step back here, Rita. So it sounds like Gaddafi used a number of different countries to stash money around the world to kind of move it around. But specifically, do we have any sense of how Gaddafi's money ended up in Canadian banks? Yes, we do. So from two other sources who are not Mr. Baja, the former Libyan ambassador to Canada, and the Globe has decided not to identify those sources because they were not authorized to speak to me about this particular issue. Their personal safety is at risk. Canadian proxies to open bank accounts and shell corporations on his behalf to hide part of his fortune outside of Libya, including here in Canada. And so this is new information that's come to light. Okay. And this might be kind of obvious, but how do we actually know that this

money came from Gaddafi, came from Libya? Is there like a way to trace it? There are ways to trace it. Now, I can't get into how the sources know what they know. Certainly here at The Globe, our editors and I do know how these people have knowledge of this matter. But if I was to discuss that, that would identify who the sources are. So this money was in Canadian banks. What happened when, I guess, when we realized this? Well, the government certainly didn't announce this. I mean, this only came to light because of the interview that Mr. Baja had with the Globe and Mail. So these are new revelations about the extent of Mr. Gaddafi's wealth that was hidden in Canada. And so there is a real question now

on what is going to happen to this money. The day after our story ran, Canada's ambassador to Libya met with officials with the Libyan state agency that's in charge of asset recovery. And this is, I believe, the second time that they have met, at least in recent months, to discuss how more assets might be returned to the state of Libya at an appropriate time. Do we know which Canadian banks have this money? So Mr. Baja declined to disclose specifically which Canadian banks have the billions of dollars that were traced to Mr. Gaddafi. But what we do have are financial records obtained from a third confidential source. Now, the Globe and Mail is not identifying this person either, because this person was not authorized to provide this information to the media. But basically what we have from this person is a data set.

And the data set covers 8,700 transactions across five bank accounts that belong to the Libyan embassy in Ottawa. And the transactions that I spoke of in the data set occurred between 2004 and 2011. And that's key because those were the final years of Mr. Gaddafi's regime. And so this data set we know was compiled by the compliance department at Royal Bank of Canada. And the data set was compiled because there was concern amongst the compliance officers that the flow of funds in and out of those five accounts appeared to be abnormal for a diplomatic mission. Now, that's according to this third confidential source that the Globe is not identifying. And so you talk about kind of like the suspicious transactions, right, or things that are abnormal. Can you give me an example, Rita, of a transaction that would be suspicious like that? So one from the data set that we obtained that involves the bank accounts for the Libyan embassy, one of them shows on November 12, 2010, there's an incoming wire payment into one of the accounts for $68.3 million. Then three days later,

on November 15th of that year, the records show a debit of about $50 million from the same account. Now, generally speaking, people who work in the world of anti-money laundering will say that rapid movements of large amounts of money in and out of an account in a short period of time is a red flag or could appear to be a red flag for money laundering. So what we don't know, however, is how many of the transactions from the RBC data set were flagged to FinTrack, Canada's anti-money laundering watchdog. There is no suggestion that RBC did anything wrong. And certainly the bank made it very clear in the statement that it provides to us that RBC adheres to all applicable laws and regulatory requirements in all of the jurisdictions

that it operates in. And that includes Canada, the United Kingdom, the U.S., and the European Union. But I should say that in reporting out this story, I reached out to the Libyan embassy in Ottawa a number of times for comment and did provide them with specifics about the financial records, and we still have not received any response to our request for comment. Okay. And you'd mentioned earlier, so Canada is not the only place Gaddafi was holding And we still have not received any response to our request for comment. And you'd mentioned earlier, so Canada is not the only place Gaddafi was holding money. Do we know where else in the world that this money was also being stashed? So there have been numerous media reports over the years that some of this money has surfaced in South Africa and other African nations. There's concern that some of it may have ended up in Europe. And the Libyan entity that's responsible for asset recovery is pursuing

a lawsuit in the United States, specifically in New York. Now, why that is key and of interest to people in Canada is that foreign banks will typically use, according to the lawsuit, U.S.-based banks to clear U.S.-denominated transactions. And it does leave a financial record of the transaction, which could help the Libyan government trace where this money ended up. We'll be back in a minute. We've been talking about the money part of the story, Rita, but I understand that some real estate is also wrapped up in all of this. So I want to ask you about a specific Toronto condo that got pulled into

this story. Can you tell me about that? Yes. So earlier this year, we found out that Mr. Gaddafi's one of his sons, Sadi Gaddafi, his condo, he years ago purchased this luxury Toronto penthouse. It's kind of diagonal from the Rogers Centre. And I was reading about this. It's like a massive penthouse, like more than 2,000 square feet, right? Like really prime Toronto real estate. It's huge. And it's been under UN sanction for many, many years.

And it remains so. So Mr. Sadi Gaddafi recently appointed someone to serve as his power of attorney. And it's this fellow that has ties to Canada, business ties to Canada. And he asked this power of attorney if it would be possible for him to explore a possible sale because he considers the penthouse a headache. That was the power of attorneys quote. And he also asked him if it would be possible to explore the opportunity to potentially rent it out. This, of course, is a very apparent violation of UN sanctions. Because this asset is frozen essentially too. They can't do anything with it. It's still frozen. He can't do anything with it legally. There is a notice on the property records that indicates that the state of Libya has claimed that that property rightfully belongs to the people of Libya. But the transfer of the title has yet to take place. And do we have any sense of how much this condo would be worth? Each property, we don't really know the worth of it until it's actually listed. But we do know that, you know, similar properties in that area can fetch $4 million. Yeah, not bad. Okay.

It's a fair chunk of change. Yeah, no kidding. Okay. We talked about this a little bit, Rita, but I'm going to ask you directly again, because we're Libya about the possibility of returning it. Of course, a key consideration for Canada would be making sure if we unfreeze any money and if we return any assets, that there is some sort of process of ensuring that the money is actually used for the benefit of the Libyan people, and that it won't disappear or fall into the wrong hands. And certainly, most people consider the, you know, democratic elections and a democratic government and the accountability that goes along with that as a precursor before more money or substantial amounts of money are returned. And do we have any sense, like, what are the chances of a democratically elected government

actually happening in Libya? Well, it's looking pretty bleak right now. I mean, there is a political deadlock. There's not agreement on the necessary legislative reforms that are required. There's a lot of rival interests. So while the United Nations has, you know, been adamant about this is the right path forward, we really need to see elections finally happen in Libya. It's not clear that they'll actually take place. Do we know, like, what can Canadian banks do to ensure that this kind of thing doesn't happen again or to safeguard it from happening in the future? So actually, right now, the federal government

is undertaking a review of Canada's anti-money laundering laws. And so that's a good thing, that there is a process that's underway looking at what we can do to tighten things up. One of the specific steps that we are taking is the introduction of a beneficial ownership registry for corporations that is supposed to be active later this year. And what that is specifically, it's a database of private corporations. And the idea here is to unmask the anonymous owners of shell corporations. And why that's important is because shell corporations can be set up in Canada, often from abroad, you don't actually have to be in the country to do it. And then those entities can be used to open bank accounts and to conduct

transactions anonymously. And there is no real way to discover who owns or controls those entities. However, there is a key flaw in the government's plan because the government's plan for this beneficial ownership registry will only apply initially to federally incorporated shell corporations. And the problem with that is that the vast majority of shell corporations are actually incorporated in the provinces, not at the federal level. But there's no kind of timeline for all the provinces to join. And we might find that certain provinces decide, you know, this is not something that we want to be a part of, which would be a real disappointment. It's going to be a difficult process, it sounds like there. I guess bigger picture, you know, these are funds from a Libyan dictator that ended up in Canadian banks. What does all of this say about Canada's relationship with Libya?

Canada continues to respect the UN sanctions that are in place. But obviously, given the role that Canada played, you know, in terms of its participation in the NATO intervention that led to Mr. Gaddafi's ouster, and the fact that Canada has since provided tens of millions of dollars for humanitarian purposes and to help rebuild the country. And as recently as this past June, Canada amended its Libyan sanctions regulation, which signals that it is prepared to provide additional aid to the country by releasing more financial assets. I mean, I think there's a real desire on the part of Ottawa to finally see democracy take hold in that country and to see the country rebuilt. And it's a real tragedy for the people of Libya who are there and seeing, you know, their aspirations for democracy stuck in a holding pattern.

Rita, thank you so much for your reporting here and for being on the show. It was my pleasure. That's it for today. I'm Mainika Raman-Wilts. Our summer producer is Nagin Nia. Our producers are Madeline White, Cheryl Sutherland, and Rachel Levy-McLaughlin. David Crosby edits the show. Adrian Chung is our senior producer, and Angela Pachenza is our executive editor.

Thanks so much for listening, and I'll talk to you tomorrow.