By on March 28, 2012


A year ago nearly to the day, I was investigating the connection between Libyan dictator Muammar Gaddafi and Fiat. With an American-led intervention in Libya underway, Reuters had reported that a Wikileaked State Department document revealed that the Libyan Government owned a two-percent stake in the automaker Fiat as recently as 2006. When I contacted Fiat’s international media relations department for comment, I received this response:

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.

It didn’t, actually. In fact the matter remained as clear as mud to me until just now, when I saw Reuters’ report that Italian police have seized $1.46 billion worth of Gaddafi assets, including “stakes in… carmaker Fiat,” under orders from the International Criminal Court.

So, did Fiat lie? Not exactly. The Libya Arab Foreign Bank did sell back its shares in 1986, but the Wikileaked memo claimed that a successor entity, the Libyan Arab Foreign Investment Company, was the more recent Libyan investor. Not being well-versed in the structure and history of Libya’s sanction-avoiding foreign investment shell companies, and lacking the resources to effectively pursue the story (tracking Gaddafi-era investments is a chore), I left it there. And even now that Italian police confirm that a Gaddafi-controlled stake in Fiat has been seized, it’s not at all clear whether Fiat’s management was aware of this.

The AGI has the most detailed account, reporting

The Guardia di Finanza Corps of Rome has seized property worth more than 1.1 bln euro from members of the Ghaddafi family upon a warrant of the International Criminal Court of The Hague. The property seized includes real estate, company shares and bank accounts that belong to members of the Ghaddafi family or to people of Ghaddafi’s entourage with an overall value of more than 1.1 bln euro

Property investigations carried out by the GdF of Via dell’Olmata, in Rome have enabled to discover two financing companies through which leaders of the former Libyan regime had made investments in Italy. [emphasis added]

That covers Fiat management fairly well: at the very least, it appears that they didn’t know about Libyan investment until police were involved. I might suspect that this very Gaddafi stake in Fiat was frozen by Italian authorities prior to my request for comment, and Fiat’s representative misled me about it… but I have no way of proving it. Time will (hopefully) tell.

Meanwhile, on this side of the pond, it’s only a little strange that this wasn’t somehow brought to light in pre-bailout vetting of Fiat. Sure, a foreign enemy of the United States was a significant shareholder in the firm that was handed a bailed-out Chrysler for no cash down. On the other hand, Libya was not on the War On Terror radar at the time, and the auto task force had enough to worry about without investigating Fiat’s shareholders. All the same, chalk this up as yet another example of the unintended consequences of government intervention in the economy.

Finally, there’s the real question: did Gaddafi actually benefit from his Fiat investment? It all depends on when this second investment in Fiat shares took place. The Wikileaked memo says Libya owned two percent of Fiat as of 2006, which means it was enjoying the short-lived Marchionne boom (financed in part by General Motors) after years of decline and stagnation. And when things headed south in 2008, snagging Chrysler for nothing sent Fiat stock on its last real bounce… which means the Gaddafi regime did benefit to some extent from the auto bailout. Still, with Fiat’s shares pricing at all-time lows the Libyan dictator almost certainly lost money on his Fiat investment over the years. Unless the Guardia di Finanza find evidence that Fiat’s management knew about Libyan investment, this might well be a case of “no harm no foul.”

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9 Comments on “Italy Seizes Gaddafi’s Stake In Fiat...”

  • avatar


    Verbatim, to all those who said ‘the US economy would’ve collapsed under the pressure of GM/Fiatsler collapsing’. Here’s yer sign it wouldn’t have.

    Indeed, it seems one of the most corrupt, ruthless dictators of our time may have PROFITED from it. Whiskey Tango Foxtrot.

    • 0 avatar

      I don`t understand your first point, Ed’s interesting article doesn’t say anything about whether the US economy would have collapsed under the pressure of GM and Chrysler collapsing.

      Next as Ed says Libya was not on the WOT watch list since under the Bush administration Libya was brought in from the cold (international sanctions removed) as it gave up its preliminary nuclear program.

      Third if they did hold a stake up until 2006 (listed above), the sale was 2008/2009 so I don`t see how this is a problem.

      Interesting article though.

      • 0 avatar

        The Wikileaks memo says he owned a stake as of 2006. I assume that is a reference to the investment that was just seized. It’s fair to say that Gaddafi’s investment temporarily benefitted from the Chrysler deal, but considering that the investment had almost certainly lost value by the time it was seized, it’s a fairly moot point.

        The moral of the story is really that everyone was basically OK with Gaddafi until he started killing protestors concurrent with a global media phenomenon, namely the Arab Spring. Then all of a sudden he was pure evil. In a world as complicated as this one, that kind of moral whiplash almost inevitably causes little ironies like this one.

        Oh, and speaking of moral whiplash and irony, I feel compelled to just leave this right here:

    • 0 avatar

      Andy, I don’t understand your non sequitur first paragraph.

  • avatar

    In all likelihood, it will take years to uncover the international financial web that Gaddafhi’s family created to hide and protect their assets. But this is nothing new; foreign despots have been investing in large corporations under various guises for years. Ultimately, it has nothing to do with the financial wisdom of Chrysler’s merger with Fiat and the consequences of that merger for the U.S. economy.

  • avatar

    Well, E.D., you’ve been vindicated. Good job.

  • avatar
    Robert Gordon

    “With an American-led intervention in Libya underway”

    Replace ‘American’ with French and UK…there’s a good chap…

    • 0 avatar

      I can do better:

      “With an illegal American-led intervention in Libya underway”

      At least illegal for America with no congressional approval. And no this was no one time “retaliatory” strike like Clinton’s cruise missile strike on the “baby milk” factory during the Lewinsky flap, this was a sustained campaign involving American military personnel as well as munitions.

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