Qaddafi’s terror victims want a piece of his frozen fortune

The American victims of several terror attacks perpetrated by the regime of deposed Libyan leader Muammar al-Qaddafi are asking the State Department to break off some of Qaddafi’s frozen assets and give it to them.

There are about $37 billion of frozen Libyan assets in the United States, some of which were Libyan government funds and some of which were the personal fortune of Qaddafi and his family. When Qaddafi made nice with President George W. Bush‘s administration, he agreed to pay the U.S. victims of his crimes $1.5 billion in restitution. But now, those victims are saying that isn’t enough money to cover the cost of what they were promised, and they want the Obama administration to divert more funds to make up the difference.

"The State Department under President Bush didn’t get enough money from Qaddafi to pay the awards. They are likely $200 million to $400 million short," Stuart Newberger, the lead attorney for victims of UTA flight 772, told The Cable. UTA 772 exploded in 1989 over the Sahara desert, killing 171 people, including 7 Americans, one of whom was Bonnie Pugh, wife of the U.S. ambassador to Chad, Robert Pugh. High-ranking members of the Qaddafi regime were implicated in the attack.

The families of the UTA 772 victims, like those of several other Qaddafi attacks, were engaged in litigation against Qaddafi before the State Department made a deal to settle all claims for $1.5 billion. The State Department transferred responsibility for doling out the money to a foreign claims settlement commission run by the Treasury Department in 2008, and dozens of victims are still waiting for their payments.

The victims are entitled to specific awards – such as $10 million if a family member died and $3 million if a family member suffered a severe injury – but their advocates always suspected that the $1.5 billion wasn’t enough to cover the awards promised. They also said the State Department underestimated the number of victims of Qaddafi’s crimes.

"The issue is how to make sure the awards are paid in full, the way the State Department and the Bush administration intended," said Newberger. "What we want is either the president, the secretary of state, or the Congress to use a very small portion of the frozen Qaddafi assets to be applied to make sure there is no shortfall.  Otherwise, these American victims of Qaddafi’s terrorism will get much less than was recommended."

Six members of Congress today asked Secretary of State Hillary Clinton to do just that, in a letter obtained exclusively by The Cable.

"We are concerned that the amount of money not yet distributed from the $1.5 billion Libya Claims Program…may be insufficient to fairly compensate some victims," said the letter, spearheaded by Pedro Pierluisi, Puerto Rico’s representative in Congress.

Other signers of the letter were Robert Hurt (R-VA), Eliot Engel (D-NY), Michael Grimm (R-NY), Mario Diaz-Balart (R-FL), and Jean Schmidt (R-OH). They want the State Department to confirm that there will be a shortfall, explain what they plan to do about it, and detail any legal obstacles to using the frozen Qaddafi funds.

The victims and their advocates became especially worried when several victims received a letter on Aug. 25 from the Treasury Department stating that some victims would only be given 20 percent of the money they were promised.

"Treasury is prepared to make an initial payment of $1,000. Treasury is further prepared to make a partial, pro-rata distribution totaling 20% of the unpaid balance that remains on your award," stated the letter, also obtained by The Cable.

Newberger said that paying pro-rata portions is a clear indication that the Treasury is aware there is not enough money in the fund to pay the victims. But he also acknowledged that the administration may not be able to peel off Qaddafi funds for the victims without some backing from Capitol Hill.

"The president probably only has limited legal authority for transferring some of this money," he said. "To make his authority stronger under U.S. law, he really needs Congress to pass a law. If the Congress does that, the president is in a much safer and stronger legal position."

In fact, Sens. Marco Rubio (R-FL) and Johnny Isaakson (R-GA) were able to add an amendment to Sen. John Kerry’s bill to authorize the Libya war that directed the administration to use the frozen funds to pay victims. But now that the war is mostly over, that bill has little chance of reaching the Senate floor, much less Obama’s desk.

For the administration, it’s a no-win situation. If it tries to take the money from the frozen funds, it risks upsetting the Libyan National Transitional Council, which thinks it should decide how to spend Qaddafi’s money. If it doesn’t act, it could appear to be abandoning the victims of Libya terrorism in the United States.

"They’ve been very careful not to take a position on this," Newberger said.

The State and Treasury Departments did not respond to requests for comment by deadline.

The victims involved in this effort include those who were part of several Qaddafi-inspired attacks in addition to the 1988 bombing of Pan Am flight 103 over Lockerbie and the bombing of UTA flight 772. They include:

• The 1972 Lod Airport attack in Tel Aviv, where 16 Americans were killed, all from Puerto Rico
• The 1983 car bombing in London, which killed one American and injured several others
• The 1984 and 1985 kidnappings and killings of Peter Kilburn and Alec Collett in London
• The 1985 hijacking of Egypt Air flight 648, where two Americans were killed
• The 1986 hijacking of Pan Am flight 73, where 3 Americans were killed and dozens wounded
• The 1987 detention of one American on the yacht Carin II