‘Special licence’ for Maltese companies to operate with frozen Libyan shareholding

This special licence is provided in accordance with the United Nations Security Council resolution that imposes sanctions on Libyan nationals and entities.

The licence allows such companies to continue operations provided that financial or economic resources are not made available to the listed entities.

The licences were issued by the finance ministry according to Legal Notices 69 and 77 that provide for the issuance of licences to locally registered companies having listed Libyan interests.

International Hotel Investments, the holding company for the Corinthia Hotel Group, has implemented the restrictive measures from the United Nations Security Council’s sanctions in respect of the shareholding in the company held by the Libyan Foreign Investment Company (LAFICO).

“It is important to note that the said restrictive measures are aimed at freezing the shareholdings held by certain Libyan entities in companies worldwide, and not at disrupting the operation of the companies themselves, particularly in instances where other shareholders have stakes too,” company secretary Alfred Fabri said.

“Notwithstanding this, the Company has sought and obtained all necessary clarifications and formal licenses from several governments in various jurisdictions where its businesses are in operation and has continued to trade normally.”

Corinthia and IHI obtained clearance from the UK government to open its London hotel despite unilateral sanctions. Corinthia Hotel Investments and International Hotel Investments (IHI) are hit by American sanctions. The Libyan Arab Foreign Investment Company (LAFICO) owns 35% of IHI and is listed in the sanctions from the US treasury department.

Reuters said that since the EU imposed “restrictive measures” on LAFICO, because the entities were under control of the Gaddafi family and a potential source of funding for his regime, its stake in Fiat SpA, Juventus and Financial Times publisher Pearson has been frozen and cannot be sold.

This means Corinthia cannot forward any income or dividends to LAFICO.

Through the ‘special licence’ Maltese companies with Libyan shareholding may continue to operate, freezing the assets belonging to the Libyan side.

A senior government spokesman that divulged the information refrained from naming the ‘specially licensed’ companies, however he added, “this has been done to safeguard the interest of the local commercial community.”

Additionally, the European Union also adopted a series of sanctions on Libya which are directly applicable to Malta for implementation.

All financial institutions and other bodies and persons in Malta need to ensure they do not maintain any accounts or otherwise hold any funds or economic resources for the entities and individuals named in the UNSC and EU sanctions.

All banks and financial institutions have been advised to observe the diligence concept to satisfy the sanction regime.

The freeze on assets mainly hit the Libyan Investment Authority (LIA), the Libyan Arab Foreign Investment Company (LAFICO) and the Libyan central bank.

The sanctions hit 27 people, including Gaddafi and Mustafa Zarti, an Austrian citizen who is Vice-Chairman of the board of directors of the Libyan Investment Authority (LIA).

The frozen assets are believed to be a source of funding for the Gaddafi regime’s continuing war against Libyan rebels.

British Prime Minister David Cameron had announced that the UK has frozen US$19.2 billion of Libyan assets, while Germany, the United States, Switzerland and Japan have also frozen assets controlled by the Libyan Central Bank and other Libyan financial institutions.

The South African government also ordered the Treasury to freeze assets linked to Muammar Gaddafi and his associates.

Libya holds billions of dollars in assets in Africa through subsidiaries of its US$70 billion sovereign wealth fund including the US$5 billion Libya Arab Africa Investment Co (Laaico), Libya Oil Holdings, Libya African Investment Portfolio and Libyan Foreign Investment Company (Lafico).

In South Africa, Libya owns the Ensemble Hotel holdings, including the luxurious Michelangelo Hotel in Johannesburg.