Santiago Principles Self-Assessment

Libyan Investment Authority

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  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

The legal framework of the Libyan Investment Authority (LIA) is preserved by Law No. 13 on the reorganization of the Libyan Investment Authority. In relation to some of the issues, which were not included in the above-mentioned law, we can refer to Law No. 23 of 2010 on commercial activity which is a reference point to be followed for such cases, and Law No 12 of 2010 on labour relations and other related legislations.

1.1. All transactions and dealings of the LIA are sound and valid by virtue of the application of its law and internal regulations. The LIA always follows the laws and regulations, in force, to ensure that there is no legal infraction or breach, which could negatively affect the overall performance of the LIA or open the field for those looking for the creation of legal stubbornness.

1.2. The legal basis of the LIA is disclosed on the LIA website, which provides a transparent and honest description of the relationship of the LIA with other government entities. For example, the LIA deals with the Audit bureau, the Administrative Control Authority, the Libyan Central Bank, and other relevant institutions and bodies.

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

Law No. 13 of 2010 regulating the LIA, constitutes the basic framework for governance within the LIA, as it separates the authorities and defines the respective powers of all levels within the LIA. In addition, the LIA's strategy focuses on enhancing governance and transparency in the management of its assets. 

For example, the LIA, as the General Assembly of its owned companies, has amended the Statutes of these companies to reinforce governance and transparency frameworks within these companies and their portfolios.

Also, the LIA has adopted a set of Charters as a guide of governance by virtue of which enhance the system of internal control and governance within the LIA, as follows:

1. The Board of Directors Charter, defines the responsibilities and powers of the Board of Directors and strengthens the LIA’s internal and external control system.

2. The Charter of the Governance Committee of LIA’s Board of Directors, to strengthen the practices of good governance within LIA’s Board of Directors.

3. The Charter of the Audit Committee of LIA’s Board of Directors, in the context of LIA's endeavor to strengthen control mechanisms.

4. The Charter of the Investment Committee of LIA’s Board of Directors, which defines the mechanism of this committee’s work, is a part of LIA’s efforts to enhance governance and transparency in the work of the Board of Directors of the LIA.

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

LIA is already subject to these rules as required by its establishing law, regulations, and meetings of the Board of Directors and Board of trustees. However, the LIA lacks detailed governing regulations likely to activate the role of the Risks department, and its relationships with executive, legislative, and international entities alike.

18.1. The assets of the LIA are frozen and there is no need to adopt such policies now. It is not in the policies of the LIA to use financial leverage. However, the LIA seeks to benefit from the period of freezing for adopting the regulations that guarantee the protection of its assets with the aim of raising its preparedness for any resolutions to be issued by the international community.

18.2. The asset-freezing orders prevent internal and external investment managers from working to ensure the success of LIA’s current investments, as those orders made the management of these frozen funds and assets very difficult and almost impossible. Also, asset-freezing orders have caused a negative impact to the LIA’s assets where it had incurred significant losses in some countries. Currently, there is difficulty in monitoring the performance of external managers.

18.3. The investment policy is clarified in the LIA Law, and it is available on its official website as follows:

1. Development of the national economy.

2. Improvement of returns to support the revenues of the Treasury.

3. Securing funds for future generations.