Sutherland caught in crossfire over Gaddafi money

13 March 2011

By Kathleen Barrington

Irish businessman Peter Sutherland was among those inside the tent when former British prime minister Tony Blair visited Libya’s Colonel Muammar Gaddafi in May 2007.
The tent was decorated with imprints of camels and shuddered with every gust of Saharan wind, according to a report in the Daily Telegraph at the time.
But it is an ill wind that doesn’t blow some good.
And Sutherland, who was then chairman of British Petroleum (BP), must have been pleased with the opportunity to sign a valuable oil exploration agreement with the Libyan government which BP would later disclose was worth about $900 million.
As a former attorney general to a Fine Gael government, Sutherland would have had a particular appreciation of the significance of the meeting between the British prime minister and the man who had once supplied arms to the IRA.
Blair was understandably keen to demonstrate that British diplomacy was paying off as far as Gaddafi was concerned, just as it had in Northern Ireland. The fact that Gaddafi renounced nuclear weapons was seen as a major coup on Blair’s part.
Many western governments, businesses and institutions such as BP took the rapprochement between Blair and Gaddafi as their cue to renew relations with Libya, though some had second thoughts when flag-waving crowds greeted Abdelbaset al-Megrahi, the Lockerbie bomber, on his return to Libya in 2009.
Now Gaddafi has found himself an outcast again, with most of the international community reacting in horror to his decision to turn the army on those of his own people who have been demanding greater political freedom.
Many countries have frozen Gaddafi’s assets, and there have been calls for a no-fly zone over Libya to prevent Gaddafi from using his air power. British prime minister David Cameron has seized the opportunity to criticise Labour’s ‘‘dodgy deals with dictators in the desert’’.
Sutherland found himself caught in the crossfire after it emerged last week that the London School of Economics (LSE), which he chairs, had accepted the first £300,000 of a promised £1.5million donation from the Gaddafi International Charity and Development Foundation.
A spokesman for Sutherland said LSE records showed that he declared a conflict of interest at the LSE Council meeting in June 2009 which decided to accept money over five years from the Gaddafi Foundation, a UN registered charity.
The spokesman said the records show he took no further part in that part of the meeting. His conflict was that, two years previously, BP had signed the deal with Libya.
Sutherland declined to comment last week in a telephone interview when asked whether he thought Gaddafi should stay or go.
Sutherland had earlier reluctantly accepted the resignation of Howard Davies as director of the LSE. Davies, a former chairman of the Financial Services Authority, Britain’s single financial regulator since 1998, fell on his sword after admitting that accepting the donation was a mistake which had damaged the reputation of the LSE.
The LSE has now commissioned an inquiry into its relations with Libya.
It will examine the donations, the acceptance by the LSE of $50,000 in return for Davies’s advice to Libya’s sovereign wealth fund, a contract to train Libyan civil servants and the academic authenticity of an award by the LSE of a doctorate to Gaddafi’s son, Saif.
It was the LSE-educated Saif who threatened the Libyan people with ‘‘rivers of blood’’ for daring to demand the very democratic freedoms that he might have been expected to champion given that his LSE thesis was on the role of civil society in the democratisation of global governance institutions.
It has all been very embarrassing for the LSE - and for Sutherland, who has enjoyed a stellar career in the private and public sectors, first as a barrister, then as attorney general, later as EU commissioner.
He also served as director-general of GATT and general counsel of the World Trade Organisation. Besides his chairmanship of BP and the LSE, he has served as chairman of AIB and nonexecutive director of the Royal Bank of Scotland (RBS) and is currently chairman of investment bank Goldman Sachs International.
But if Sutherland prefers not to comment on Gaddafi, he has certainly been vocal on Irish matters. Last week, he wrote a ‘‘hard-hitting’’ op-ed article in the Financial Times, in which ‘‘I let my patriotism run loose’’ as he put it to The Sunday Business Post. In the article, Sutherland emphatically stated that the interest rate being charged to Ireland on the EU/IMF loan facility was ‘‘exorbitant’’.
The interest rate payable on the loan is 5.8 per cent compared with a funding cost of 2.9 per cent.
‘‘It is also probably unsustainable having regard to likely growth rates," he wrote. ‘‘Far from helping the problem, it is therefore likely to exacerbate it."
Sutherland told The Sunday Business Post that addressing our deficit was the key to Ireland restoring its credibility.
His intervention came just days after former Fine Gael taoiseach John Bruton, who is now employed by the banking sector here, delivered a speech at the LSE.
Bruton accused the European Central Bank of a major failure of supervision in not restraining British, German, Belgian and French banks from lending to Irish banks, though he also warned of the reputational cost to Ireland of breaking our word by inflicting losses on bank bondholders.
Sutherland has repeatedly argued that Ireland should not burn the bondholders.
He said he was ‘‘offended’’ when informed that his call for the bondholders to be repaid had raised eyebrows in some circles, given that Goldman Sachs had been named in a document published on Britain’s Guido Fawkes website as a bondholder in Anglo Irish Bank.
His spokesman separately makes the point that Sutherland would not have been aware of every position that Goldman held in bonds.
Sutherland will have done Ireland some service if his intervention helps persuade the European authorities to cut the interest rate bill now facing the Irish taxpayer.