The Malta Independent 13 July 2020, Monday

Malta in centre of dispute over cash that was being sent to Libya

Kevin Schembri Orland Monday, 1 June 2020, 11:25 Last update: about 2 months ago

One of Libya's Central Banks has hit out over Malta's seizure of $1.1 billion of Libyan currency, and the question surrounding whether it is counterfeit or not.

The Maltese government has found itself in the middle of a possible diplomatic and legal situation involving the United States of America's State Department, one of the Central Bank of Libya (in Benghazi), and a Russian company.

The Guardian, back in November 2019, had reported that the Maltese government had seized "a massive shipment of unofficial Libyan banknotes believed to have been destined for Khalifa Haftar, the military commander leading an offensive to dislodge the UN-backed government in Tripoli."


The US Department of State, on May 29 2020, issued the following statement.

"The United States commends the Government of the Republic of Malta's announcement May 26 of its seizure of $1.1 billion of counterfeit Libyan currency printed by Joint Stock Company Goznak-a Russian state-owned company-and ordered by an illegitimate parallel entity.  The Central Bank of Libya headquartered in Tripoli is Libya's only legitimate central bank.  The influx of counterfeit, Russian-printed Libyan currency in recent years has exacerbated Libya's economic challenges. The United States remains committed to working with the United Nations and international partners to deter illicit activities that undermine Libya's sovereignty and stability, and are inconsistent with internationally-recognized sanctions regimes.  This incident once again highlights the need for Russia to cease its malign and destabilizing actions in Libya."

The issue surrounds the Central Bank in Benghazi. Reuters in March had described the situation in Libya as being "divided between the Tripoli-based Government of National Accord (GNA) in the west, which is internationally recognised, and a parallel government in the east, each of which has a central bank."

Both Central Banks are called the Central Bank of Libya.

The Central Banks of Libya, based in Benghazi - not the Central Bank based in Tripoli - has issued a response refuting the US State Department's claims.

"The Board of Directors of the Central Bank of Libya (CBL) reviewed the statement of the US State Department spokesperson issued on 29/05/2020, regarding the confiscated shipment of printed banknotes printed at the Russian "Goznak" company with a value of 1.45 billion dinars (1.1 billion dollars), and while the Board of Directors refuses the US department's statement, we would like to clarify the following points."

The Directors said that the banknotes printing process "is an inherent process and within jurisdiction of the Board of Directors, as guaranteed by Banking Law."

The Board of Directors said that in accordance with its authority, it took the decision to print the currency, "after (the dismissed by Parliament) Governor was intransigent in distributing the cash liquidity fairly and reasonably to all cities, using the central bank for politics, including, but not limited to, sending only (167) million dinars to commercial banks in the eastern region since 2015."

The directors said that the Russian printing house "Goznak" did their due diligence prior contracting with the CBL and agreed to carry out the printing process after it had confirmed the integrity of the legal status of the Board of Directors and the procedures and decisions taken.

"In September 2019, the Maltese customs authorities seized a consignment of bank notes (not yet circulated) on their way to Benghazi seaport. The shipping company and the printing house did all their attempts to release the shipment, but they did not reach a positive result."

The directors said that an international law firm has been assigned to take over the matter with the customs authorities of the State of Malta to release the shipment.

"In May (2020) the international law firm took its actual legal measures against the Maltese customs authorities."

"It is now clear to us that the timing of the US State Department's publication of its statement corresponds with the beginning of legal procedures. We record our surprise at the American statements' insistence on giving legitimacy to the central bank in Tripoli while the American government knows that the Libyan Parliament was elected fairly and was ousted with the legitimate government by militias from Tripoli and changed the governor, ignoring this and that the actual crisis lies In terms of powers and responsibilities and not in the centralization of the location, which requires us to confirm that all procedures are legal and within the limits of the powers of the Board of Directors of the Central Bank, and that the statement was issued in support of an illegal status imposed by force in Tripoli as a justification of current events."

"We would like to point out that the Central Bank's administration communicates with all international institutions such as UNSMIL and the American Embassy regarding the arrangements for the international revision of the bank's branches in Tripoli and Al Bayda, as well as the United Nations Experts Committee that inquired about the incident and that it conflicts with paragraph (11D) of Security Council Resolution No. (2213) For the year (2015)." The UN Security Council resolution paragraph regards freeze measures in acts that are threatening or coercing Libyan State financial institutions and the Libyan National Oil Company, or engaging in any action that may lead to or result in the misappropriation of Libyan state funds." The directors said: "as we replied previously, this paragraph does not apply to the incident inquired about, and the committee did not make any observations about the shipment in its report in 2019, but the incident was mentioned in the report as an occurrence without comment."

The Board of Directors 'confirms' the integrity of its legal and constitutional status, and that all procedures and decisions taken by the bank stand on a solid legal ground besides any local or international political disputes and disagreements."


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