U.S. bribery inquiry into £870m held by HSBC for Gaddafi

Daily Mail, By ROB DAVIES, 1st July 2011

HSBC faces being caught up in a U.S. bribery inquiry over hundreds of millions of pounds it held on behalf of Libya.

Dictator: Colonel Gaddafi has invested
up to £870million with HSBC, which
no faces an inquiry

There has been a dramatic rise in deposits with the bank, according to a leaked internal report from the Libyan Investment Authority – which invests some £40billion of oil wealth collected by Colonel Gaddafi's regime.

Last June, HSBC held £182million of Libya's money, the document shows.

Just three months later, that had risen to more than £870million.

As details of the report emerged, sources said HSBC could be caught up in a U.S. investigation looking at whether banks paid Libyan officials in return for managing the North African nation's money.

The Serious Fraud Office, which prosecutes white-collar crime in the UK, is understood to be helping U.S. regulators with their inquiries into banks that did business with Gaddafi's regime.

Insiders said the investigation revolves around allegations that banks, hedge funds and private equity firms paid so-called 'placement agents' in return for being given access to Libya's state investment fund.

One source confirmed that the U.S. Securities and Exchange Commission was looking into HSBC, Britain's biggest bank, as it casts its net for evidence.

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All Libyan money held by HSBC and other British banks has since been frozen as part of sanctions against the dictator.

Campaign group Global Witness, which obtained the report, called for legislation to force banks to publish any funds they manage on behalf of nation states.

Spokesman Robert Palmer said: 'Banking secrecy laws still mean that citizens are left in the dark about how their own state's funds are managed.

Dark clouds gathering: HSBC has declined to comment
on whether it was the subject of a specific investigation
on the mater

'We can't continue with a situation where information about how a state handles its assets is only made available once a dictator turns violently on his own people and information is leaked.'

The leaked report also revealed how Libyan officials were enraged and embarrassed by the woeful performance of some investments.

Gaddafi's henchmen invested £870million with five financial institutions, only to see them lose nearly £200million and demand £50million in fees for the trouble.

The 23 per cent decline in its investments came against the backdrop of global stock markets rising by more than 25 per cent in the same period.

An HSBC spokesman said: 'HSBC has stringent policies and procedures for countering bribery and corruption in all the jurisdictions in which it operates.

'These apply to dealings with government entities, private organisations and individuals.'

It declined to comment on whether it was the subject of a specific investigation.