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Libyan Sovereign Fund Official Faces Austrian Asset Freeze

March 3 (Bloomberg) -- Austria’s central bank is expanding an asset freeze of 26 Libyans to include the deputy chief executive officer of the North African country’s sovereign wealth fund.

The National Bank ordered Mustafa Zarti’s accounts frozen as of tomorrow, a bank spokeswoman said today. Austria’s Foreign Ministry requested the freeze because of Zarti’s close links to Libya’s ruling family, spokesman Peter Launsky-Tieffenthal said in a telephone interview.

“He is not on the original list even though he is very close to the Qaddafi family,” Launsky-Tieffenthal said. The Foreign Ministry is conducting a parallel investigation into how Zarti received Austrian citizenship, he said.

Zarti’s telephone at the Libyan Investment Authority wasn’t answered during business hours in Tripoli today. Libya, through its $70 billion Investment Authority, holds shares of Royal Bank of Scotland Group Plc, Finmeccanica SpA and Pearson Plc, according to data compiled by Bloomberg.

Muammar Qaddafi and his entourage may have invested around 30 billion euros ($42 billion) in Austria, Vienna’s Die Presse newspaper reported yesterday citing an unnamed former aide to the Libyan leader. Austrian banks have 1.2 billion euros in deposits from Libyan clients, the central bank said March 1.

Zarti, a friend of Qaddafi’s son, Saif al-Islam, may have funneled investments through Austrian foundations, according to the Die Presse report. He flew from Tripoli to Vienna on Feb. 21, the newspaper said, citing an unidentified source familiar with the investigation.

“One will certainly find something, the question is whether one will find everything,” Ewald Nowotny, the Austrian central bank governor, said on ORF state television March 1. “It is important that the money doesn’t flow away. And then you can start discussing whom it really belongs to.”

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net; Boris Groendahl in Vienna bgroendahl@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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