The Mystery Of The Fiat-Gaddafi Connection
Back in 1976, the Italian automaker Fiat had been badly battered by a global energy crisis and the resulting malaise infecting the global auto industry. In what Time Magazine described at the time as “a devastatingly ironic example of petropower,” Col. Muammar Gaddafi instructed his Libyan Arab Foreign Bank to invest some $415m into the Italian automaker, giving it a stake that would eventually grow to some 14 percent of the firm’s equity.
By 1986, Fiat’s Libyan stakeholders were becoming more trouble than they were worth. In the wake of the Lockerbie bombings, the US introduced sanctions on Libya, and Fiat’s Libyan connection left its attempts to bid for US military contracts (particularly those related to Ronald Reagan’s Strategic Defense Initiative) dead on arrival. As a result, Fiat and its shareholders bought back the entire 14 percent Libyan stake in the firm, presenting the Libyan Arab Foreign Bank-controlled Banca UBAE with a $3.1b check. And, according to what a Fiat spokesperson told us yesterday, that is where the story ends. But thanks to the now-ubiquitous Wikileaks, we have found that this story may in fact go farther than that. In fact, as the evidence stands right now, either the US State Department is working with bad information (which major news sources have yet to correct), or Fiat is lying about its ties to the embattled Gaddafi regime.
As with so many of the best stories in recent months, the major point of factual conflict in this tale comes from a Wikileaks-sourced US State Department memo. The memo, which does not appear at cablesearch.org, was provided to Reuters by an unnamed third party and was cited in a Reuters piece that focused on Gaddafi’s ownership of Wyndham Hotels. The Fiat connection isn’t made clear until well towards the bottom of the story, when Reuters reports
If the Gaddafi-controled LAFICO/LFICO held two percent of Fiat as recently as 2006, then the public narrative that had Fiat completely buying out its Libyan backers in 1986 is not completely accurate. In hopes of reconciling the discrepancy between the leaked memo (which presumably reflects the conclusions of the US intelligence community) and the public rejection of Libya’s equity stake in Fiat, we reached out to Fiat’s international media relations staff requesting clarification. The response, from Fiat’s Richard Gadeselli, came as follows:
Unfortunately, it doesn’t clarify the matter at all. Either Mr Gadeselli isn’t telling us the whole story (which could be the case for any number of reasons, not all of the nefarious), or the Wikileaks memo cited by Reuters is incorrect, a possibility that is equally likely for a number of reasons. For one thing, we haven’t seen the leaked memo itself, and so we can not verify the exact source of the intelligence reported by Reuters. And even if we could verify that the US State Department and intelligence community had reason to believe that Gaddafi-backed investment funds continued to hold a stake in Fiat as recently as 2006, it’s conceivable that the US government had experienced a failure of intelligence. As a 2001 piece by businesstoday.com reports, Gaddafi’s own money manager Ali El Huwej has admitted that Libya uses a number of techniques to invest in Europe despite US sanctions.
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