How dictators stash their cash 101: Qaddafi, Mubarak, and others

Stephen Kurczy — Fri, 25 Feb 2011 07:05:05 EST

The US Embassy of Tripoli called it "Qaddafi Incorporated" – the Libyan family's "strong interests in the oil and gas sector, telecommunications, infrastructure development, hotels, media distribution, and consumer goods distribution."

It is also a system where Muammar Qaddafi “often speaks out publicly against government corruption” while at the same time distributing millions of dollars to politically connected Libyans, and giving his family and other elite "direct access to lucrative business deals," according to the leaked May 2006 cable obtained by WikiLeaks. Qaddafi reportedly pocketed some for himself, with experts seeing a multibillion-dollar gap between Libyan oil revenues and government spending.

"Compared to egregious pillaging of State coffers elsewhere in Africa, or the lavish spending of Gulf Arabs, the Libyans don’t see much to complain about in their leader’s lifestyle, as long as he does a good job of making sure other people get a piece of the pie," the cable says.

Other populaces have indeed complained about their leaders' lavish spending, as did Egyptians seeking the return of billions allegedly pilfered from their state. During his 30-year-rule, Hosni Mubarak and his family reportedly amassed a fortune estimated up to $70 billion. Dictators build their personal wealth, analysts say, typically through embezzlement, bribes, and nepotism.

According to a January report (pdf) from the Washington-based watchdog Global Financial Integrity, $6.4 billion in illicit funds flowed out of Egypt annually from 2000 to 2008. That ranks it behind 20 other nations in terms of illicit outflows. Leading the list is China, which reportedly lost $242 billion annually in illicit financial flows from 2000 to 2008. Trade mispricing accounted for an average of 54.7 percent of cumulative illicit flows from developing countries over the period.

"Skyrocketing prices for oil, other minerals, and foodstuffs generated funds which easily escaped abroad," said the Washington-based group’s director, Raymond Baker, a former senior economist at the International Monetary Fund. For the people into whose pockets the money flows, the next step is deciding where to store it.

“Hiding money is not rocket science,” says Jeffrey Robinson, author of 1995 money laundering exposé “The Laundrymen," highlighting that Mubarak’s son, Gamal, spent the mid-1990s in London working for Bank of America and “learning the business from the inside.”

Others have taken simpler measures to steal away their wealth. The wife of ousted Tunisian President Zine al-Abidine Ben Ali reportedly shoved 1.5 tons of gold (worth $60 million) in her bag before fleeing to Saudi Arabia last month.

But rarely are illicit funds so brazenly swept from a nation, adds Mr. Robinson: "We have this image in the James Bond movies of some bad guy showing up with a million dollars in a suitcase – first of all you can’t do it: it takes three suitcases."

How dictators stash their cash 101: Qaddafi, Mubarak, and others

How dictators stash their cash 101: Qaddafi, Mubarak, and others

How dictators stash their cash 101: Egypt, Libya not alone in losing assets

How dictators stash their cash 101: Qaddafi, Mubarak, and others

Swiss freeze Qaddafi assets: How dictators stash their cash 101

How dictators stash their cash 101: How can Egypt track stolen assets?