Frank Jordans, Associated Press
COLLOMBEY-MURAZ, Switzerland — Flames and smoke shoot up from the Libyan-owned oil refinery on the eastern tip of Lake Geneva, suggesting one of Moammar Gadhafi's outposts in Europe is still in business. As world powers tighten their military and financial grip around his regime, some governments are hesitating to freeze all of the assets controlled by the North African country's repressive ruler.
An Associated Press investigation has found that several European countries have accepted assurances from Libya's Tamoil petroleum company that none of its profits reach Tripoli. In return, Tamoil has been allowed to continue operating unchecked, despite the fact its parent company is on a United Nations sanctions list.
Officials at Tamoil's European headquarters didn't return requests for comment, but representatives at four of the group's national subsidiaries said they were abiding by the sanctions.
"No money from the gas stations flows, directly or indirectly, to persons or institutions subject to sanctions," Catrin Bedi, of Tamoil's German subsidiary, told AP. All money was reinvested to expand the German operation, she said.
Yet experts say European governments are being naive, or simply self-serving, in an attempt to protect European jobs and oil supplies.
"It's a political decision. It would be naive to think that Tamoil is independent," said Zurich-based money-laundering expert Michael Alkalay. He said Western governments that readily did business with Libya in recent years now criticize Gadhafi's regime but are doing little to clamp down on its assets, the most visible of which is Tamoil whose logo fronts gas stations from the Baltic Sea to the Mediterranean.
Gary Hufbauer, a former U.S. Treasury deputy assistant secretary in the Carter administration, said European governments — which like the U.S. have frozen Libyan cash deposits in their banks — are essentially taking Tamoil's word for it that the profits won't get back to Gadhafi.
"If the Europeans are serious about imposing the freeze, they shouldn't be allowing any money to be paid if it's going to any part of the Libyan regime," said Hufbauer, now a senior fellow with the Peterson Institute for International Economics in Washington.
World powers intentionally stopped short of naming Tamoil in their sanctions lists, he said, citing its importance to Europe.
The company's Swiss branch is registered in the southwestern town of Collombey-Muraz, where it operates a 72,000 barrels-per-day refinery that supplies more than 300 gas stations throughout Switzerland. Sister companies in Spain, Germany, the Netherlands and Italy operate 2,500 more gas stations, and there are two other refineries in Hamburg, Germany, and Cremona, Italy.
The refineries' combined capacity is 255,000 barrels of crude oil a day, or about 2 percent of the 14 million barrels that power Europe daily. Libya was producing 1.58 million barrels a day of crude oil in January, according to International Energy Agency figures.
All are part of a Dutch-based holding company, Oilinvest (Netherlands) B.V., whose sales ran to some $10 billion in 2009. Oilinvest, in turn, is owned by the Libyan Investment Authority, the country's sovereign wealth fund estimated to be worth $65 billion. Last month, the LIA was placed under international sanctions on the grounds that it is controlled by Gadhafi or persons close to him.
Tamoil's links to the regime, however, aren't enough for Switzerland to shut it down, according to the Swiss State Secretariat for Economic Affairs, or SECO.
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