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Libyan Fund Owns $20 Billion in Bonds, About 1% of Italy's Eni, Zarti Says

The Libyan Investment Authority owns $20 billion in bonds and holds about a 1 percent stake in Italian oil company Eni SpA (ENI) as part of $9 billion in equity stakes, its former deputy chief executive officer said.

The country’s main sovereign-wealth fund had about $65 billion of assets, most of it cash and short-term securities, when the uprising against Libyan leader Muammar Qaddafi began last month, Mustafa Zarti said in a Bloomberg Television interview in Vienna. Zarti quit on Feb. 24 to protest violence against civilians.

“I resigned from the LIA actually because it’s not a healthy environment, as you see in the news,” he said. “I cannot work in that environment with the violence and the blood.” He added that he had “no idea” whether the Tripoli- based fund was still operational and hadn’t been in touch with fellow managers since he left Libya on Feb. 21.

Among the fund’s long-term investments are its 2.6 percent of UniCredit SpA (UCG), Italy’s biggest bank; 2 percent of Italian defense contractor Finmeccanica SpA (FNC); 3 percent of Pearson Plc (PSON), publisher of the Financial Times; and 2 percent in Wienerberger AG (WIE), the Vienna-based world’s biggest brickmaker.

Rome-based Eni, which has been involved in Libya for half a century, has refused to confirm the Libyan stake, which would be worth about 718 million euros ($998 million) at current market prices. “It’s a long-term investment in a company we like,” Zarti said about the Eni investment.

Freezing Assets

European Union authorities have agreed to extend a freeze on Libyan assets to include the Libyan Investment Authority, the central bank and other Libyan entities in an effort to drive Qaddafi from power, four officials familiar with the plan said yesterday.

Zarti, the highest-ranking executive of Libya’s investment vehicles publicly known to have resigned, will be among a group of Libyan individuals to be included in the asset freeze. That move would follow a freeze ordered by Austria, of which Zarti is a citizen and where he currently lives. Zarti today challenged the Austrian freeze in the country’s constitutional court, his spokesman said.

In his resignation letter to the Libyan Investment Authority, which was provided by his spokesman, Zarti wrote that the government’s violent response to protests prompted his resignation.

“What is taking place in our beloved Libya as a result of unjustified violence against civilians, who seek reform and change, has resulted in so many lives having been lost,” Zarti wrote in the letter. This “prompts me as a Libyan citizen” to “submit my resignation as Vice Chairman of the Board of Directors.”

To contact the reporters on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net Olivia Sterns in London at osterns1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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