The London Fund Manager, Libya and the $230,000 Hotel Bill

Inside The Lanesborough Luxury Hotel Following Renovation Work

The Lanesborough hotel in London.

Photographer: Matthew Lloyd/Bloomberg
  • Ex-Bear Stearns banker sued for work as fund manager for Libya
  • Frederic Marino says pay increases were approved by directors

A London banker hired by Libya to manage more than $800 million is being sued over claims he misappropriated assets the country had invested before the revolution to support a lavish lifestyle.

Frederic Marino was sued by FM Capital Partners over the losses he was allegedly responsible for while running the fund. Marino approved millions of pounds in bonuses and other payments from 2009 through 2014 even as the value of the assets in the fund slumped by $64.6 million, according to documents in FMCP’s lawsuit released last week, which haven’t been previously reported.

Marino is accused of using a note restructuring and performance and management fees for his own benefit before he was terminated in November 2014. He allegedly racked up expenses on a company credit card for a helicopter ride, clothes and restaurant bills. He also spent 165,000 pounds ($230,000) at the five-star Lanesborough Hotel, including 42,000 pounds on parking, the fund says in the suit.

"We’re just trying to solve this mess, so I don’t think I can talk about it," Marino, 49, said on the doorstep of his west London home last week.

Qaddafi Ouster

Marino took advantage of the political unrest in the North African country to feather his nest, according to the fund’s lawsuit, which was filed in London in December 2014. The United Nations is trying to forge a unity government to stem the political crisis in Libya, that began with the ouster and death of Moammar Qaddafi in 2011. The country is divided between two opposing administrations, each with its own legislature and armed allies, that have been tussling over oil and power for more than a year.

Libya has struggled with stability since the old regime was ousted in 2011.
Libya has struggled with stability since the old regime was ousted in 2011.
Photographer: Mahmud Turkia/AFP via Getty Images

Jason Woodland, Marino’s lawyer at Peters and Peters, declined to comment but provided Bloomberg with his defense filings, which aren’t yet available through the court. Lawyers at Hogan Lovells, which represents FMCP, declined to comment.

Marino, a former Bear Stearns and JPMorgan Chase & Co. banker, said in the filings that substantial increases in his salary and bonus had been approved at board meetings attended by directors representing the Libyan government. FMCP hasn’t provided proof of the sums spent on the company credit card, he said.

Board Meetings

London-based FM Capital Partners was incorporated in July 2009 shortly after Marino met with the then-deputy chief executive of Libya Africa Investment Portfolio, Abdulfatah Sharif, in Libya. The fund was 67 percent owned by the LAP, which itself was a unit of the country’s larger Libyan Investment Authority, with the remaining stake held by Marino. At the formation of FMCP, LAP held more than $800 million in investments, lawyers for FMCP said.

The troubles began as the Libyan revolution took hold in 2011. FMCP directors appointed by LAP stopped attending board meetings, leaving Marino and a colleague to make remuneration and investment decisions without supervision, lawyers for the fund said in court documents.

In March 2011 FMCP’s ability to trade was "severely hindered" when LAP was placed under sanctions imposed on Qaddafi’s government, according to Marino. Even so, the pair "took advantage" of the directors’ absence to approve a formula for "substantial" bonus payments, lawyers for FMCP said.

Performance Targets

The men also allegedly reset performance targets, enabling FMCP to dish out increased fees. The performance fee income for the fourth quarter of 2011 alone was more than 2 million pounds, the fund said.

Marino received 240,000 pounds a year starting in May 2011, which was at least 100,000 pounds more than he was entitled to under his employment contract, according to the lawsuit. He also received 2.6 million pounds in management bonuses and another 214,160 pounds in trading bonuses that FMCP says he wasn’t entitled to receive.

In his defense filings, Marino said that communications with Libyan officials became increasingly difficult, with e-mails bouncing back or simply never answered. Still, he says, the pay increases were approved by directors and were in line with the compensation levels mapped out before he even started at FMCP.

Marino told Sharif during the 2009 meeting that he expected to be paid a 2 percent to 3 percent commission, and mentioned a figure in the region of $18 million pounds, according to Marino’s defense. Sharif "did not demur or object," he said.

Fallout over Libyan investments during and after the fall of Qaddafi has spilled into U.K. courts. The $60 billion Libyan Investment Authority, LAP’s parent, sued Goldman Sachs Group Inc. and Societe Generale SA, each for more than $1 billion, trying to recoup losses from investment deals that turned sour. Both banks are contesting the allegations.

Libya's GDP is heavily reliant on oil and gas exports.
Libya's GDP is heavily reliant on oil and gas exports.
Photographer: Shawn Baldwin/Bloomberg

The rival government entities in Libya are seeking any proceeds from both the Goldman Sachs and Societe Generale lawsuits, an issue that will be reviewed at a London trial that starts Monday.

In addition to salary and bonuses, the Marino lawsuit details more than 225,000 pounds in expenses Marino allegedly incurred through January 2014. The Lanesborough Hotel in London, across the street from the gardens of Buckingham Palace, was a favorite spot. The 165,000 pound-bill also included 1,660 pounds for laundry.

According to the lawsuit, Marino paid smaller sums to people "related to or favored by him," lawyers said, including his wife, a woman he was "in a long-term personal relationship with" and a nephew. Marino’s two family members were added to the lawsuit, according to a Jan. 19 court filing.

Marino’s wife declined to comment on behalf of both herself and her nephew. Marino’s lawyer, Woodland, declined to say if the family members had representation.

In his defense filing, Marino said all the payments were properly made for services provided. A phone number for the other person involved in that portion of the claim couldn’t be located.

The case is FM Capital Partners LLP v Frederic Marino in the U.K. High Court of Justice, Queen’s Bench Division, case no CL-2014-000863

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