Comments on: Investor concerns over Libya’s SWF are justified Mon, 26 Sep 2016 03:26:00 +0000 hourly 1 By: BrockIntel Fri, 25 Feb 2011 22:11:25 +0000 Many concerns over the LIA’s historic lack of transparency, original source of wealth and the fund’s strategic investments in Africa (which coincidentally could be viewed as an extension of Gaddafi’s intent to head a “United States of Africa”) were clearly pushed aside for short term financial expediency. This article finally defines the possible future consequences of such an investment decision. Consequences will likely be hardest felt in Italy, a long-time ally of the falling Libyan regime. However, research conducted by CEIP indicates that other sovereign wealth funds (SWF) based in countries deemed “low” on the democracy index in the MENA region – UAE, Qatar, Kuwait – are considerably more compliant to the Santiago SWF principles than the LIA. The possible exception, and concern, is the Bahrain FGRF, considered to be equally low on the compliance index as the LIA and currently unstable.

Risk appetite varies greatly from one institution to another. While no-one can see into the future, we should all be aware of the need for thorough and considered due diligence before investing in those parts of the world where instability and a lack of transparency are rife. Although such caution may never triumph over financial expediency in the boardroom, without a thorough treatment of risks, companies can be badly exposed to financial loss, regulatory exposure and reputational damage.