Libyan officials who have been profiting from letters of credit (L/Cs) obtained to manipulate the official and black market exchange rates could be subject to a wide-ranging corruption probe.

A British-backed agreement to end a blockade on Libya's oil exports is conditional. One condition is that a major corruption purge must be carried out in Tripoli's central bank and the national oil company.

Currency manipulation

Central bank officials may be investigated for abusing their power to authorise who can obtain L/Cs in foreign currency.

Huge profits can be made out foreign currency exchange because the official rate of one US dollar to about 1.4 Libyan dinar is far lower than the black market rate of 6-10 Libyan dinar.

This means that L/Cs intended for companies to import essential goods are instead mainly used for currency fraud.

US$5bn L/C fraud

Libya's Audit Bureau reported in 2016 that L/C fraud totalled US$5 billion.

While local banks issue L/Cs, they are authorised by the central bank.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.