Financial Crime World

Libyan Arab Jamahiriya: A Hotbed for Financial Fraud in Businesses Amidst Weak Institutions and Instability

Key Challenges for Businesses in Libya

  • Pervasive corruption: The absence of strong regulatory agencies and instability continue to pose significant challenges for businesses in Libya.
  • Public procurement and oil industry: Corruption persists, with unfair competition from state-owned enterprises and weak regulatory agencies.

Institutional Challenges

Judiciary: Weak and Politically Interfered

  • Limited enforcement of judicial verdicts: Ambiguity due to the absence of a permanent constitution.
  • Weak enforcement of foreign judgments: Libya is not a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Police: High Corruption Risk

  • Low trust and ability to maintain law and order: No effective mechanisms to investigate corruption among security forces.

Public Services: High Corruption Risk

  • Rampant bribery and inefficient bureaucracy: Transparency in the regulatory framework is lacking.

Property Rights and Taxation

Land Administration: Ambiguous Property Rights

  • Foreign investors cannot own land: Ambiguous regulations create uncertainty in property rights.

Tax Administration: High Corruption Risk

  • Irregular payments demanded from tax officials: Paying taxes takes longer than regional averages.

Administrative Challenges

Customs Administration: High Corruption Risk

  • Border transparency is low: Irregular payments are pervasive when importing goods.

Public Procurement: Very High Corpression Risk

  • Favoritism and widespread bribery: State-owned firms dominate the domestic market, leaving significant room for bribery.

Privatization and Anti-corruption Measures

  • Progress in privatizing nationalized enterprises: Transparency surrounding the bidding criteria and foreign investment processes is lacking.

High-profile Corruption Cases

  • SNC-Lavalin and Riadh Ben Aissa: Allegations of embezzlement, bribery, and wrongdoing related to public contracts.

Natural Resources and Extractive Industries

  • Potential for unreported corruption: Transparency issues in the oil and gas industry and government management of oil revenues persist.

Inadequate Anti-corruption Measures

  • Lack of anti-corruption legislation: Current laws, like the Libyan Criminal Code and a specialized anti-corruption law, are not effectively enforced.

Organization Efforts against Corruption

  • Libyan Transparency Association: Dedicated to fighting corruption but limited reach and influence due to the fragmented political landscape and freedom of speech constraints.

International Cooperation against Corruption

  • Libya not signed onto the OECD Anti-Bribery Convention: Further limiting efforts to combat financial fraud and promote business integrity.

Sources