How a tangled and deadly web of global corruption spreading out from Gaddafi’s Libya threatens to topple Justin Trudeau

Canada’s prime minister is in trouble over prosecution of Libya-related bribery scheme. Such scandals have already led to prosecutions, indictments and jail time around the world, writes Borzou Daragahi

During the final years of Muammar Gaddafi’s rule, a steady stream of businesspeople and senior former officials like Tony Blair jetted in and out of Tripoli. They hobnobbed with Libyan officials or even the main man himself inside his tent at the Bab al-Aziziya compound, from where he ran the oil-rich country.

Over small talk and copious servings of tea, they cut potentially questionable deals, handing over consultancy fees or other monies to grease the wheels of Libyan bureaucracy in what amounted to alleged graft, kickbacks and other scheming that tested or transgressed the limits of their own nations’ anti-corruption laws.

The deal-making of that era has now come back to haunt those who allegedly took part and those near them, most recently threatening to damage one of the world’s leading engineering firms and weaken or even topple the government of Canadian premier Justin Trudeau, and perhaps engulf even more companies.

Mr Trudeau’s administration stands accused of attempting to soften penalties against SNC-Lavalin, a Montreal-based engineering giant that allegedly paid C$48m (£27m) in bribes to Libyan officials to win contracts in the decade before Gaddafi’s downfall.

Allegedly corrupt business dealings with the Gaddafi regime have already led to raids, seizures of assets, convictions and jail time in cases in the Netherlands and Norway, and deals under quiet scrutiny by prosecutors stretch the globe, involving firms in Europe, Asia, North America, and the Middle East, an investigation by The Independent reveals.

Much of the scrutiny of these deals had been suspended in part because overburdened European prosecutors were struggling to pursue cases against nationals who joined Isis and other jihadi groups. But with the Isis conflict drawing to a close, several sources said some of the matters could be resurrected.

The cases, some involving alleged payoffs stretching back years, serve as a warning for big companies seeking deals in kleptocratic regimes known for corruption.

“There’s a mentality that corruption is just the way things are done in certain countries while ignoring the impacts of corruption,” said James Cohen, executive director of Transparency International Canada.

“There’s also a perspective that because of lax enforcement, some companies think they can play the odds and get away with corruption. I think this should be a cautionary tale.”

There’s a mentality that corruption is just the way things are done in certain countries while ignoring the impacts of corruption 

James Cohen, executive director for Transparency International Canada 

The businesspeople and politicians often met with Gaddafi’s sons Saif al-Islam and Saadi or surrogates such as National Oil Company chief Shokri Ghanem to talk about deals, especially in the energy sector, according to Libyan businesspeople and western diplomats.

“All those used to go there to make unbalanced business transactions,” said Abdulhamid el-Jadi, a Libyan banker and anti-corruption activist who has spent years examining energy and other deals of the Gaddafi area.

The glad-handing intensified in 2003 after the UN lifted sanctions in Libya over its nuclear programme, even catching the attention of American officials in Libya.

“The National Oil Company appears to be actively looking for ways to extract additional concessions, or to cut services previously provided to the international oil companies,” said a leaked US diplomatic cable from 2007.

Many secrets about the deals are believed to have gone to the grave with Ghanem, Gaddafi’s last oil minister. He was the alleged go-between for many of the bribes before he defected to the west in 2011 during the final months of the collapsing regime, according to European prosecutors.

His lifeless body was found floating in the Danube in on 29 April 2012, six months after Gaddafi’s death. The autopsy report said he drowned. Austrian authorities recovered no obvious evidence to suggest violence or foul play.

Prosecutors are now burrowing through the documents and testimony to try to unravel who paid what to whom, and for what purpose.

According to Norwegian and Swiss prosecutors, Ghanem’s son Mohammed served as the alleged bag man in the case of Yara International, an Oslo-based fertiliser giant.

The company wound up paying the largest corruption fine in Norwegian history and four of its executives were indicted for allegedly paying bribes to win a concession to build a plant in Marsa el Brega and for a separate deal in India, with one defendant receiving a seven-year prison sentence, according to court documents.

Tony Blair met with Muammar Gaddafi on the outskirts of Tripoli in March 2004 (Getty)

Norwegian and Swiss prosecutors said they discovered Yara deposited at least $1.5m (£1.2m) in a UBS account belonging to a company in the British Virgin Islands that was operated by Mohammed Ghanem, according to court documents.

The four executives claim they didn’t pay bribes but only fees to agents and consultants. Norwegian prosecutor Marianne Djupedal described the Yara prosecution in 2015 as “just a small part of what’s proven to be a much bigger and complex case” that spans multiple jurisdictions, bank accounts, and shell companies registered in tax havens.

Dutch prosecutors have for years been pursuing a case against a $700m hedge fund in the Netherlands called Palladyne, which was operated by Ghanem’s son-in-law, Ismael Abudher. Its mandate was to manage assets of the Libyan Investment Authority, which managed Libyan public funds.

During a search of his home, Dutch investigators found documents suggesting Mr Abudher owned at least a dozen British Virgin Islands shell companies. Dutch investigators in the case concluded that Mr Abudher had used the firms to embezzle money from the LIA portfolio, according to documents obtained by The Independent.

According to an email obtained by The Independent and confirmed as authentic by Dutch officials, prosecutors in the Netherlands have also been examining payments and communications between Palladyne, its associated shell companies, and a number of major firms.

“We came across several (oil) deals involving Ismail Abudhur and Shokri Ghanem whereby we established that funds were going to be transferred to offshore companies operated by Ismail Abudhur,” the Dutch investigator wrote in the 4 March 2016 email. “Not all the deals went through.”

The companies cited in the email are:

• Dow Chemicals, the US petrochemical giant, which sought and obtained a joint venture to operate in Ras Lanuf, a petroleum and petrochemical complex in eastern Libya
• Sinopec, China’s state-owned energy behemoth, which has been under investigation for obtaining oil and gas deals using bribery
• Hellenic Petroleum, a partially state-owned Greek energy oil giant that sought to win energy exploration deals
• Crosco, a Croatian oil services firm that expanded its presence in Libya during the Gaddafi era
• Weatherford, a US and Swiss oil drilling firm that sought to win contracts in Libya
• LG Chem, a South Korean chemical engineering firm that sought deals in Libya
• Pertamina, Indonesia’s state oil and gas firm, which sought Libyan investment in its refineries
• Star Consortium, a now-defunct UAE partnership of two firms that has been prosecuted in Libya and mired in a years-long legal battle over control of a refinery at Ras Lanuf in the wake of a 2008 deal that has come under scrutiny. The firm had long maintained it was fleeced by Libyan counterparts
• Arab Drilling and Workover Company, a company owned by a consortium of 10 Arab states that has been probed for connections to the Ghanem family

All of the companies named in the email obtained by The Independent have been contacted for comment, apart from the now defunct Star Consortium, for whom contact details are unavailable.

There is no evidence any of these companies took part in any illegal activities.

In the Canadian case, two former SNC Lavalin employees, Sami Bebawi and Stéphane Roy, were charged in 2014 by the Royal Canadian Mounted Police with bribing Libyan officials to win deals over the course of a decade.

The Trudeau administration is accused by a former attorney general of pressuring officials to agree to a deferred prosecution or remediation deal that would spare the company further damage. The company, which employs 50,000 people worldwide, has seen its shares plummet over the last year.

Mr Trudeau denied he exercised pressure on the prosecutor, but conceded he urged officials to consider the broader economic implications of bringing the company, which employees 9,000 Canadians, to its knees over the case.

“They create many thousands of spin-off jobs in peripheral industries they directly and indirectly put food on the table for countless families as one of Canada’s major employers,” Mr Trudeau said in his recent press conference addressing the scandal, in which he refused to apologise but admitted mistakes had been made.

“But they are also a company facing serious criminal charges,” he continued. “These are the types of situations that make governing a challenge.”

Mr Cohen warned that such calculations by governments and public enforcers risk glossing over the victims of corruption. “It’s a slap in the face of citizens of these countries who do want change and don’t want to live in under a corrupt and repressive regime.”