Ten Libyan companies based in the Tripoli suburb of Tajoura received US$1 billion in illegal letters of credit (L/Cs) from two banks according to a UN report.

It says the Libyan Foreign Bank (LFB) and Jumhouria Bank gave the money to two companies, Alwatar and Hadaeq Tarabulus, both of which are owned by one man.

Violating regulations

The owner, Abu Bakr Abu Sahmain, used his power in Tripoli to recruit armed groups to help him extort Jumhouria Bank officials into providing the L/Cs according to the report.

This clearly violated Central Bank of Libya (CBL) regulations.

Sharp criticism

Established in 1972 and Libya's first offshore banking institution licensed to operate internationally, LFB has reportedly drawn sharp criticism from the central bank recently.

The CBL has accused the LFB of gambling with Libyans' money, a letter written by central bank officials and seen by local media shows.

Irresponsible directors

The CBL said the LFB is investing illegally abroad and in the process of doing so it has accumulated losses of US$403 million.

The central bank has also reportedly criticised LFB's chairman, Mohammed Bin Yousif, and the bank's directors, accusing them of "playing with Libyans' money and of lacking the proficiency needed in the financial market and in administrating the investments of the LFB overseas".

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