Tag Archives: Imports

Libya: Central Bank (CBL) Imposes 5 Inspection Companies to Control Trade with Libya

 

In its attempt to stamp out corruption, the Central Bank of Libya (CBL) has imposed the following 5 Companies to Inspect all goods traded with Libya: Lloyds, Bureau Veritas, DNV-GL, GQS (Global Quality and Services) & GITO (General Inspection Technical Office)

Attached is the Official Circular (In Arabic only).

Advertisements

Libya: Tobruk Port Struggles with High Cargo Volumes

Tripoli, 4 July 2016:

Tobruk, the only fully-functioning eastern port is buckling under the sheer weight of cargo arriving on its docks its director has warned today.

Ghaith Thami has said that the port is running out of warehouse space as a wide range of cargos piles up awaiting truckers to take them away. The port’s difficulties are being made worse by unpaid salaries for dock workers. In order to get the goods they have ordered, Thami said that some businessmen were actually paying the dockers themselves.

With the exception of the non-unionised Khoms, no Libyan port has a particularly outstanding record in normal times. Tripoli has been notorious for the refusal of dock workers and truckers to handle more than one or two containers per shift.

Thami gave no figures for recent cargo ship movements into the port. He said however that  he had asked the town’s municipal council to provide extra storage space. The municipality was in turn pressing the Libyan Central Bank the provide the funds the pay salaries. He did not say if this was the Tripoli or Beida central bank.

It is also unclear what impact the port congestion is having on the local Customs department. But Thami warned that many of the goods stuck in warehouses had been ordered for Eid and entrepreneurs were desperate to have them delivered.

Benghazi and Derna ports remain too dangerous for ships to unload and truckers to carry offloaded cargo away.

LH 5.7.2016

 

Libya: Khoms Port police seize money laundering containers

Khoms police reported yesterday that it has stopped containers of goods purported to be part of a money-laundering operation. Its Counter Crime Unit stopped the seven containers after they had exited the city’s port.

The containers were supposed to contain foodstuffs according to declared documentation and hard currency letters of credit (LC).

The Counter Crime Unit did not give the exact value of the transaction but reported that the LC was opened in the ‘’millions of dollars’’. The case was seen as further possible evidence of the widespread money-laundering and ‘’exhaustion of assets of the country and abuse of public funds’’.

Upon inspection, the seven containers were found to contain a front row of relatively inexpensive boxes of tea and the rest of the containers were full of even more inexpensive boxes of water.

In March, Khoms police reported that it had also seized containers supposedly full of household goods, but again these only had a front row of household goods – with the rest of the containers full of the more lucrative fireworks.

It will be recalled that there have been a number of cases over the last year of money-laundering through the opening of hard currency LCs, only for the alleged criminals to import goods either at the fraction of the value of the LCs – or to even send empty containers to Libya.

There have been reported cases where the beneficiaries of the money-laundering LCs have all together abandoned their containers in Libyan ports.

The Central Bank of Libya and Audit Bureau have been conducting a campaign to counter this phenomenon. Critics have accused the CBL of acting too late.

LH 12.4.2016

 

Libya: Over 500 abandoned containers in Tobruk port, part of foreign currency corruption scam

There are more than 500 abandoned containers in Tobruk port, Tobruk Deputy Port Manager, Omar Jilghaf told Libya News 24 yesterday as a result of the financial corruption that the country is experiencing.

He said that some have been in the port for more than 5 months and that most of the goods in them had perished and began to let off a foul smell. The containers had passed the legal time limit permitted by Libyan customs and that the port authority is in the process of disposing of or selling by auction their contents, he added.

‘‘Financial corruption is (the reason) behind these abandoned containers as some traders scramble for letters of credit (LCs) from banks at the official exchange rate. They buy cheap or useless products and leave them inside the port after they receive their hard currency which they use as they wish’’

The Deputy Manager said that some containers were actually empty and others contain products that no one needs – all done through fake and incorrect transactions. In some containers alcohol and (hallucinogenic) pills were found – all as a result of traders seeking dollars which they are not entitled to, he maintained.

The phenomenon of containers arriving at Libyan ports either empty or filled with goods costing a token of their declared price on official customs declarations forms has grown in post-revolutionary Libya as a result of the weak state and its weak enforcement and inspection institutions.

In theory, goods arriving at Libyan ports imported through the opening of LCs at the official exchange value of about LD 1.30 (as opposed to the black market rate of LD 3 to 4.50) to the dollar, are supposed to be inspected by customs officers to confirm that their contents tally with their pro forma invoice in value and specifications.

If the inspections of containers by customs officials at Libyan ports raise concerns, the LCs are supposed to be stopped. However, by bribing or in the case of militias coercing customs, port and bank officials, fake import transactions are able to get through.

As a result, corrupt ‘‘traders’’ in collaboration with bank, port and customs officials, are opening LCs in the millions of dollars which are transferred abroad – but in return for either grossly undervalued goods or indeed empty containers.

The scam is costing Libyans hundreds of millions in hard currency at a time when low oil production and exports and low international crude oil prices mean that Libya’s hard currency revenues and reserves are depleting fast.

Commenting on the news, leading Libyan businessman Husni Bey whose group of companies are one of the largest importers of goods into Libya, said ‘‘we thank the Deputy Manager of the port of Tobruk for exposing and broaching the subject’’.

‘‘I ask him and the rest of the managers of Libyan ports to quote the names of the companies involved in the import, the names of shareholders of these companies, the names of the directors and the names of the signatories of the companies’ bank accounts’’.

‘‘I also request the names of the shipping lines, forwarders and carriers’ agents of those to be revealed. A thorough independent investigation must be carried out’’, Bey added.

Speculating on the possible size of the problem, Bey said ‘‘If there are 500 abandoned containers in the port of Tobruk, this is just the tip of the iceberg, then certainly there are 10,000 abandoned containers across all Libyan ports’’.

‘‘I hope that we call criminals “criminals” and not “traders ” because criminal offenders must be called “criminal” and not by any other misleading name “, Bey concluded.

It will be recalled that in February this year the Attorney General/Public Prosecutors Office had issued a number of arrest warrants for financial corruption including for abandoned containers in Tripoli port that first came to light in August 2015.

In November 2015 it was reported that 110 containers of rice unfit for human consumption were unloaded at Tripoli port. Social media had shown photos of insect infected rice.

The insect-infected 110 containers were reported to be part of a larger deal totalling 400 containers for 10,000 metric tons of rice at an estimated value of LD 10.3 million.

LH 10.03.2016

Libya: CBL to open LCs as black market dollar peaks at LYD 4.50 today

The Tripoli-based Audit Bureau held a meeting in the capital today with various institutions including the Central Bank of Libya (CBL) in order to attempt to solve the huge financial crises that the country finds itself in.

In a statement released by the Audit Bureau after the meeting, it confirmed that a meeting was held ‘‘to discuss the liquidity crises experienced by the country and the development of proposals and solutions for the immediate and medium term’’.

‘‘It was agreed to accelerate the resolution of the crises through a number of procedures that would speed up the flow of funds in banks as of next week by opening letters of credit (LCs) to provide basic goods and other operational materials’’, the Audit Bureau said.

Unconfirmed reports from the meeting say that the plan is for the CBL to open US$ 2 BN of L/Cs at the official exchange rate of around 1.30 for importers.

It is clear that the CBL is not in favour of an earlier policy option floated by the Administrative Control Authority of pumping LD 10 bn of newly printed banknotes into the economy in the hope of solving the cash crises at banks. The pumping of cash into the economy was seen by critics as inflationary and counter-productive.

The meeting is long overdue in view of the cash crises in Libyan banks, the collapse in the value of the Libyan dinar against foreign currencies as well as the rise in prices.

Today, one Tripoli-based black market money exchanger reported to Libya Herald that the dollar reached a record LD 4.50 and the Euro 4.90 against one dinar. This followed a raid on the black market on Monday by security personnel forcing them to close their bureaux and cease trading.

The move on the money traders follows the questionable populist narrative that it is the black market traders who are controlling the flow of foreign currency in order to force exchange prices upwards.

It is not clear if the CBL is going to relax its newly introduced conditions for opening LCs. In an effort to fight criticism and answer back public criticism, the CBL introduced numerous conditions which many business leaders saw as prohibitive.

The CBL is caught between a rock and hard place in attempting to be seen to be fighting foreign currency corruption at Libyan banks, in managing its fast diminishing foreign currency reserves but at the same time satisfying foreign currency demand so as not to cause the black market exchange rate to overheat.

Critics, however, have told Libya Herald that they still believe that the CBL is ducking the hard decision of officially devaluing the Libyan dinar to nearer the black market value of 1 to 3. The CBL finds it politically unpalatable to be associated with a dinar devaluation.

In ordinary political circumstances, the CBL would probably be persuaded by its sovereign parliament, to which it is accountable, to devalue the Libyan dinar. But in the legitimacy and political vacuum that Libya finds itself in, the CBL seems reluctant to take the hard decision on its own.

But critics today said that the decision not to devalue is very short term-ist. It will only encourage the black market and subject the banks to pressure and coercion as those with access clamor to get LCs at the official exchange rate.

The most equitable across-the-board solution is to devalue the Libyan dinar and wipe out the black market by making foreign currency available to whosoever demands. The downside is that as all newly imported goods will be at the new devalued exchange rate prices will rise in the short term.

The devaluation will also attract Libyan dinars into the banking system thereby resolving the cash crises as well.

This view presupposes that the rise in the black market exchange rates as well as the cash crises are purely financial. However, there is the view that Libya’s financial crises is as much caused by the political crises and fear and insecurity and that as long as these underlying problems persist Libyans will continue to hoard their cash at home and the black market exchange rate will remain high.

LH 9.3.2016

 

Libya: CBL introduces new stringent internal and external restrictions on opening of LCs

The Tripoli-based Central Bank of Libya (CBL) has introduced a raft of stringent internal and external conditions on the opening of Documentary Letters of Credit (LCs).

The conditions dated 7th January but published yesterday are quite detailed and lengthy running into seven pages.

They include the use of the relatively new internal credit check system by local banks prior to giving any sort of credit facilities to any Libyan.

In future, deposits made by debtors will not be returned to the customer until the Libyan authorities are confident that the goods have actually been imported into Libya and that all outstanding customs, tax and banking duties have been paid.

The CBL has also introduced demands on correspondence banks as well as demanding checks on foreign export companies and their owners, including allegations of money laundering, corruption and experience.

The use of international inspection companies and certification as well as heath certification, the use of international established transport companies enabling database and tracking are introduced.

The new conditions also stipulate that no land transport for products from third part nations is permitted and require much more detail in certificates of origin. It also makes it more difficult to import goods from unauthorized dealers or general traders.

The stipulation that international inspection companies are used for goods imported through LCs comes on the back of reports of fake and fraudulent LCs being opened in return for the importation of substandard or bogus goods purely as a means of obtaining hard currency.

In November 2015 the CBL was forced to defend itself against responsibility for import corruption when a huge shipment of substandard rice was detected at Tripoli port.

On 3rd November the Tripoli-based Audit Bureau had partially reversed its mid-October decision of freezing the accounts of 160 individuals and companies for alleged money laundering and customs and tax evasion.

In September 2015 the Tripoli-based government had introduced an import regulation system to unify and control import licences and LCs. In June 2015, the CBL had eased the opening of LCs for manufacturing raw materials.

In May, the Tripoli authorities went as far as imposing an import ban on 32 items through LCs for six months. However, the ban was reversed in June after receiving criticism as inflationary and encouraging black marketeering.

Both the CBL and Audit Bureau have introduced a series of measures over the last two years in an effort to save depleting foreign currency reserves and corruption against money laundering in a climate of post-revolutionary weak state institutions and decreased state oil revenues.

HL 13.01.2016