The Obama administration’s move to freeze $30 billion in Libyan assets has sent Wall Street banks scurrying to lock down Qaddafi’s cash. Raising the question: How did America’s biggest firms become bankers to one of the world’s most corrupt men?
Anti-money-laundering statutes are supposed to bar “the movement of illicit cash or cash equivalent proceeds into, out of, or through the United States [or] … United States financial institutions.” And when it comes to Libya, there’s no such thing as licit cash: According to a WikiLeaked State Department cable: “Libya is a kleptocracy in which the regime has a direct stake in anything worth buying, selling or owning.”
And yet, according to a cable from 2010, top U.S. banks were in bed with Qaddafi’s Libyan Investment Authority: “Several American banks,” our embassy in Tripoli reported, “are each managing USD 300-500 million of LIA’s funds.”
Firms reportedly playing banker to Libya’s “sovereign wealth fund” include Goldman Sachs, Citigroup, JP Morgan Chase, and several private equity firms.
According to federal law, before doing business with LIA, these banks were required to do “due diligence” to determine 1) That the assets were legitimately obtained and 2) That they were legitimately handled on behalf of the Libyan people and not, as one government source put it to Rolling Stone, “just a pass-through to a kleptocrat.”
This source found it “hard to believe … that a sophisticated Wall Street investment firm could legitimately believe” that Libyan assets passed those tests: “How could anyone do due diligence,” the source asked, “and come to the conclusion that this was a good bet?”