The Mystery Of The Fiat-Gaddafi Connection

Edward Niedermeyer
by Edward Niedermeyer
the mystery of the fiat gaddafi connection

Back in 1976, the Italian automaker Fiat had been badly battered by a global energy crisis and the resulting malaise infecting the global auto industry. In what Time Magazine described at the time as “a devastatingly ironic example of petropower,” Col. Muammar Gaddafi instructed his Libyan Arab Foreign Bank to invest some $415m into the Italian automaker, giving it a stake that would eventually grow to some 14 percent of the firm’s equity.

By 1986, Fiat’s Libyan stakeholders were becoming more trouble than they were worth. In the wake of the Lockerbie bombings, the US introduced sanctions on Libya, and Fiat’s Libyan connection left its attempts to bid for US military contracts (particularly those related to Ronald Reagan’s Strategic Defense Initiative) dead on arrival. As a result, Fiat and its shareholders bought back the entire 14 percent Libyan stake in the firm, presenting the Libyan Arab Foreign Bank-controlled Banca UBAE with a $3.1b check. And, according to what a Fiat spokesperson told us yesterday, that is where the story ends. But thanks to the now-ubiquitous Wikileaks, we have found that this story may in fact go farther than that. In fact, as the evidence stands right now, either the US State Department is working with bad information (which major news sources have yet to correct), or Fiat is lying about its ties to the embattled Gaddafi regime.

As with so many of the best stories in recent months, the major point of factual conflict in this tale comes from a Wikileaks-sourced US State Department memo. The memo, which does not appear at, was provided to Reuters by an unnamed third party and was cited in a Reuters piece that focused on Gaddafi’s ownership of Wyndham Hotels. The Fiat connection isn’t made clear until well towards the bottom of the story, when Reuters reports

A 2006 U.S. State Department cable obtained by WikiLeaks and made available to Reuters by a third party describes LFICO/LAFICO as Libya’s largest government-owned investment company, operating under the auspices of something called the “General People’s Committee” which has served as the Gaddafi government’s Ministry of Trade and Economy…

The State Department cable said that, as of 2006, LFICO’s holdings in Italy included 2 percent of Fiat, 15 percent of the Tamoil energy company, and 7.5 percent of Juventus, where a soccer-playing Gaddafi son, Saadi, once sat on the board. The cable said LFICO also had over $500 million worth of investments in Britain.

If the Gaddafi-controled LAFICO/LFICO held two percent of Fiat as recently as 2006, then the public narrative that had Fiat completely buying out its Libyan backers in 1986 is not completely accurate. In hopes of reconciling the discrepancy between the leaked memo (which presumably reflects the conclusions of the US intelligence community) and the public rejection of Libya’s equity stake in Fiat, we reached out to Fiat’s international media relations staff requesting clarification. The response, from Fiat’s Richard Gadeselli, came as follows:

Dear Mr Niedermeyer,Further to your email, I would mention that the Reuters report you refer to is incorrect. As too are other similar mentions that have appeared recently in the media concerning the LIA’s holdings in Fiat.The LIA sold all of its 14% shareholding in Fiat SpA in 1986 – ten years after its initial stake was bought. It no longer has a stake in Fiat SpA.I trust that this clarifies the matter.Unfortunately, it doesn’t clarify the matter at all. Either Mr Gadeselli isn’t telling us the whole story (which could be the case for any number of reasons, not all of the nefarious), or the Wikileaks memo cited by Reuters is incorrect, a possibility that is equally likely for a number of reasons. For one thing, we haven’t seen the leaked memo itself, and so we can not verify the exact source of the intelligence reported by Reuters. And even if we could verify that the US State Department and intelligence community had reason to believe that Gaddafi-backed investment funds continued to hold a stake in Fiat as recently as 2006, it’s conceivable that the US government had experienced a failure of intelligence. As a 2001 piece by reports, Gaddafi’s own money manager Ali El Huwej has admitted that Libya uses a number of techniques to invest in Europe despite US sanctions.Banca di Roma didn’t violate economic sanctions, because the stake was sold through Libyan companies rather than the Libyan government, Mr Brambilla said.Though they were sporadically enforced, the sanctions nevertheless limited Libya’s room for manoeuvring in some countries. For example, Libya’s UK bank accounts were frozen and funds such as dividends from the Metropole stake could not be transferred to Libya.That is why Lafico works to avoid detection when it makes investments, Mr Huwej says, adding that in everything it does, Lafico is aware the US is watching.As such Mr Huwej sometimes avoids doing business under Lafico’s name. A farming company in Egypt owned by Lafico is registered there as simply Agriculture Investment Co., he says.

Another strategy employed by Libya is to keep stakes small or indirect, particularly in banking companies. Though bank investments are a small slice of Libya’s holdings, they’re among the most scrutinised by the authorities, as access to banks means access to money and the ability to move it around the world.

In any case, either Fiat isn’t telling the truth or the US Government was misinformed about Libyan ownership of a firm that is poised to take over the bailed-out US automaker Chrysler. In the interests of truth, we call on Fiat and Reuters to help resolve this factual discrepancy. If anyone knows where to find the Wikileaks memo in question or has any information regarding this story, we encourage them to send it to our contact form.
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3 of 38 comments
  • Djn Djn on Apr 10, 2011

    Ed, Even if you could get your hands on the "leaked cable/memo" how would you have the know-how and resouces to authenticate it? In Eugene, OR !??

  • Another Another on Mar 23, 2023

    So the United States invaded and killed Kaddaffi just so Fiat could buy Chrysler. And now Peugeot is buying out Fiat. Soon will China buy out Peugeot? Did the US not care about their critical industry that they willingly give it away even if a nice neat little war is needed to do so?

    • Clint Neumann Clint Neumann on May 03, 2023

      hmmm yeah but one purchase you forgot to add, that maybe your not familiar with or have been subverted to believe otherwise ,which in case you have been subverted dont feel bad its way way more common than you could even imagine China owns everything including the United States . So there will be know war , well surrounding that matter

  • ToolGuy CXXVIII comments?!?
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂