New Libya Foreign Bank General Assembly meets to choose new Board of Directors – against CBL wishes

banking - November 26, 2020

Led by Faraj Bumtari, the joint Minister of Finance and Minister of Economy, the General Assembly of the Libyan Foreign Bank (LFB) held what it referred to as a preliminary meeting during which agreement was reached on the criteria and controls needed to select the members of the bank’s board of directors.

The meeting comes on the back of Decree No. 13-14/2020 by the internationally recognized Libyan government led by Faiez Serraj based in Tripoli.

The controversial decree used a Qaddafi-era law that allows the government to sack and choose the LFB’s board of directors. This it did earlier this month, overruling the Tripoli Central Bank of Libya’s (CBL) choice of LFB new chairman.

The CBL has a different reading of Libyan law and perceives that all appointments of its subsidiaries are made by it.

Analysis

The move and consequences of the decision of the Tripoli Libyan government’s decision to interfere in the appointment of the LFB’s new board and chairman must be seen through the prism of the larger power struggle between the Tripoli CBL and the Tripoli government and the National Oil Corporation. The move has larger consequences on the attempted peace plan between western and eastern Libya.

West-East peace deal v better transparency distribution

As part of the bigger political deal to achieve peace between west and east Libya, Khalifa Hafter and his aligned forces agreed to allow Libya’s oil production and exports to resume from the eastern oilfields – in return for better transparency of how Libya’s oil money is spent and a more equitable distribution of this money between the three historic Libyan regions of west (Tripolitania), east (Cyrenaica) and south (Fezzan).

This political deal, not sanctioned by the Tripoli CBL, entailed that as of the resumption of oil exports, new oil revenues must be held in suspense in the LFB until a political deal on the fairer distribution of this money is agreed. All Libya’s oil revenues are paid into its LFB.

The National Oil Corporation (NOC), very keen to restart oil production and save its corroding infrastructure and deteriorating oil wells, was fully onboard with the agreement. It was prepared to hold oil revenues in its LFB account and not transfer them within the usual 72 hours into the CBL controlled account.

The CBL, however, has objected to handing over control of oil money to the NOC, in what it sees as going beyond the NOC’s technocratic remit, and objected to the idea of playing a redistribution of wealth role.

The CBL had clashed with the LFB top leadership anyway, which is under investigation for corruption.

Hence, by taking control of the leadership of the LFB, the Serraj government and its ally the NOC were taking political control of Libya’s oil revenues – control which they have been in a power struggle over with the CBL since taking office.

In short, by wrestling control of the LFB away from the Tripoli CBL the Tripoli government is ensuring that the peace deal with eastern Libya is not derailed.

libyaherald



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