Dutch hedge fund Palladyne International Asset Management BV was sued in the U.S. for as much as $500 million by a former executive who claims the company helped Libya’s Qaddafi regime launder money in exchange for kickbacks.
The Amsterdam-based firm’s main purpose was the “laundering and concealment of funds illicitly siphoned” from the regime of Muammar Qaddafi, who was deposed and killed in a 2011 revolution, Dan Friedman, the former employee, said in a complaint filed in U.S. District Court in New Haven, Connecticut, on March 25. The firm denied the claims.
Friedman, a resident of Stamford, Connecticut, said in his suit that he was hired by Palladyne in November 2011, after being contacted by U.K.-based recruitment company SThree Plc. He said he was soon told by other employees that the firm was “the asset management company equivalent of a Potemkin Village, fronting for a kickback and money laundering scheme relating to funds out of Libya,” according to the suit.
“Simply stated, Palladyne was a fraud,” Friedman said in the suit. “It was nothing more than a façade created to conceal criminal transactions” funded by the regime.
The funds were allegedly funneled to Palladyne at the request of Shukri Ghanem, the now-deceased father-in-law of Palladyne’s Chief Executive Officer Ismael Abudher and at the time the head of Libya’s state-run National Oil Corp., according to the suit. Ghanem had “total control over the source of all of Libya’s investment funds,” Friedman said in the suit.
SThree Plc (STHR) was also named as a defendant because the company “collaborated and conspired” with Palladyne to use deceptive practices to lure Friedman into employment with the firm, according to the suit.
Friedman said in the suit he was fired in February 2012, with “no legally cognizable explanation” after relating his concerns about the firm’s criminal exposure to a colleague who then told Abudher.
Friedman has lost employment opportunities and the “serious taint” of Palladyne on his resume has caused damage to his career and future salary prospects, according to the suit.
“These entirely untrue and ludicrous allegations have been made by a former employee who has repeatedly tried to extort money from the company,” Palladyne said in an e-mail statement today. “He worked with us for just two months before being dismissed for gross misconduct.”
Kevin Smith, a spokesman for SThree in London, said the lawsuit “has no basis in fact or law.”
“The claim is entirely without merit,” Smith said in an e-mail statement today. “Our lawyers are currently preparing a motion to dismiss the claim.”
The case is Friedman v. Sthree Plc, 3:14-cv-00378, U.S. District Court, District of Connecticut (New Haven).