Gaddafi regime sold $1 billion in gold in final months

In its final months, the regime of Muammar Gaddafi resorted to selling off a huge part of Libya's gold reserves.

The Financial Times reports:

Qassim Azzuz, the new central bank governor, said the Gaddafi regime raised more than $1bn to pay salaries from trading 29 tonnes of gold with local traders in April, with the metal then possibly being taken out of the country for resale.

Libya's new government says the sell-off represented a fifth of the country's reserves, and jewelers in Tripoli described how the central bank first tried to sell small 22-carat coins before later offering 12kg bars worth around half a million dollars.

“A lot of the gold dealers who bought this from the bank are not working now," jewelry shop owner Abdulghani Kara said. "They know they did something wrong, and they are trying to lie low.”

Unlike most central banks, Libya's held its 144 tons of gold reserves inside the country. When its assets were frozen and its oil industry shut down, the regime had few other options to turn to for cash.

Even as the sales were going on, pro-rebel television stations and a prominent Islamic leader in Tripoli warned people not to buy the metal.

CIA estimates say that the gold sell-off was the equivalent of two weeks of government spending in peacetime, the Financial Times reports, but if it had just been used to pay the army the money could have lasted much longer. Farhat Bengdara, a former central bank governor who defected from the regime, speculated that gold sold in April could have been taken to Tunisia by Gaddafi's relatives.

On Friday, Interpol issued a red notice for Gaddafi, his son Saif al-Islam and former intelligence chief Abdullah Senussi, putting the three men among the world's most wanted fugitives.