Almost £1bn of assets, beneficially owned by Muammer Gaddafi and 5 members of his family, have been frozen by the British government as the UK joins other European countries in taking concerted action against the Libyan leader.
Steven Philippsohn, partner and asset recovery expert at PCB Litigation LLP, explains how the source of assets may be identified and, if believed to represent the proceeds of illegitimate activity, how they may be frozen:
‘Following the passing of the resolutions by the United Nations and then by the European Commission various member countries have directed banks and other financial institutions that are holding assets belonging to Gaddafi and members of his inner regime to freeze those assets. At the moment it is suggested that the total value of assets frozen would be roughly £1 billion.
Therefore, a number of financial institutions worldwide are under an obligation to monitor and report suspicious transactions, and to perform due diligence on assets. What has happened is that banks and financial institutions have been issued with lists identifying Gadaffi and 26 members of his regime and various other related organisations and they’ve been told “you must identify and disclose any assets which are controlled by these various parties.” So hopefully if the financial organisations have done their job it shouldn’t be much of a problem.’
It was also reported that a boat which was bound for Tripoli was seized by the UK border agency along with its cargo of £100 million worth of Libyan bank notes. Steven said that ‘it is not surprising that this amount has been seized. This was currency that was printed in the UK, which was bound for Libya and it could well have been used in part for legitimate purposes. So it’s not necessarily the case that it would have all been unlawful.’
‘Once assets have been frozen’, Steven explained, ‘the source and legitimacy of those assets will be investigated. If Gaddafi is able to demonstrate that they were obtained legally, then he will be entitled to recover them, just like anyone else. If this is not possible, then eventually these assets will be returned to a new government of Libya or a recognised institution in that country.’