Libyan Investment Authority loses High Court claim for $500 million

A Malta-based subsidiary of the Libyan Investment Authority – the Libya Africa Investment Portfolio (LAIP) – has suffered massive blow in the London High Court in defending a $500 million claim over contractual breach.

The High Court of England and Wales ruled that the LAIP’s defence had been “fanciful” and awarded damages to Catalyst Managerial Services (CMS) for more than US$15 million.

The judgment is part of CMS’s wider case against LAIP for breach of the very same contract with the potential for maximum damages of more than $525 million.

CMS, a specialist management services firm originating in Australia and based in Dubai, brought a claim in August 2012 against LAIP for unpaid project fees and damages relating to a five-year management services contract commenced in Tripoli in 2009, that was however terminated by LAIP six months prior to the Libyan revolution. 

The High Court found that LAIP failed to provide any evidential basis of substance for supporting a defence to the claim for the outstanding payments and that any such attempt to defend its position must be considered to be fanciful”.

Zia Qureshi, former chief executive officer of CMS, said that Libyan revolutionary leader Mustafa Abdul Jalil, a respected judge himself, had instructed LAIP to settle.

“We were dragged into a legal fight by the LAIP CEO, Mr Ahmed Kashadah, a fight that we did not want. We wanted to help Libya realise the great value of our expert work. The LAIP’s CEO’s behaviour was simply disgraceful towards us. Finally the gloves had to come off.”

CMS was sought out by the LAIP founding chairman Bashir Saleh Bashir to assist it with its management.

“The CMS work delivering tremendous value, stopping corruption and rejecting investment proposals that did not pass the due diligence test and other rigorous criteria regardless of who brought the proposals into LAIP,” Qureshi said.

He said CMS built business development strategies worth US$20 billion, and LAIP’s portfolio value was increasing rapidly and had reached in excess of US$8 billion in 2010 from the base value of US$5.5 billion.

“The CMS contract was abandoned by the Gaddafi regime, six months prior to the Libyan Revolution to get the Libyan institutions back to where they belonged in old Libya, under the strict control of the Gaddafi family,” Qureshi said.

Qureshi claimed LAIP’s new managing director Ahmed Kashadah is a former manager in the Libyan Investment Authority from the Gaddafi regime, who had many opportunities to settle the case amicably but instead threatened CMS through criminal and civil legal action in Libya.

“We had built a thorough understanding of how these institutions operated during the Gaddafi regime. I believe Libya is wasting billions in looking backwards, fighting cases rather than meeting its legal obligations and blaming others for its own failures, poor capabilities, corruption and institutional negligence,” Qureshi said.