Dutch hedge fund Palladyne International Asset Management BV was sued in the U.S. by a former employee 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, former employee Dan Friedman, said in a complaint filed in federal court in New Haven, Connecticut, on March 25. The firm denied the claims. Friedman said he was fired from the firm because he raised the allegations and has had difficulty finding work since then.
“These entirely untrue and ludicrous allegations have been made by a former employee who has repeatedly tried to extort money from the company,” the firm said today in an e-mailed statement.
Friedman, a resident of Stamford, Connecticut, is described in his complaint as “an experienced financial services executive.” He said 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 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.
Palladyne said Friedman is seeking more than $500 million in his suit and worked for the company for 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.”
Friedman’s lawyer, Alan H. Kaufman of Kaufman LLC, said in an e-mail that his client is seeking about $45 million, in addition to punitive damages, and that demands for cash or anything else weren’t made. The firm and SThree were given the chance to challenge the allegations before the suit was filed and failed to do so, Kaufman said.
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.
The case is Friedman v. Sthree Plc, 3:14-cv-00378, U.S. District Court, District of Connecticut (New Haven).