Qaddafi's assets include luxury homes around world

By Scott Cohn, Senior Correspondent, CNBC

Winnington Close is a quiet, leafy cul de sac in one of London's most exclusive neighborhoods, Hampstead Garden. It has seven stately brick homes, most with a Mercedes or two in the driveway.

This kind of luxury does not come easy in London, and it does not come cheap. Take Number 7 Winnington Close, for example. With eight suite-style bedrooms, a marble foyer, a swimming pool and jacuzzi and a private movie theater.

The property, and others in the UK and around the world, including a wealthy New Jersey suburb, are among the real estate holdings of the Libyan government, dictator Muammar Qaddafi and his family.

The Winnington Close home last sold for a reported $16 million, to a company based in the British Virgin Islands. But locals know it as the home of Saif al-Islam Qaddafi, the second son of Muammar Qaddafi, and until not long ago, his heir apparent.

A neighbor who did not wish to be identified said members of the Qaddafi family used the house only occasionally, but when they did, "we all felt safe because there were always two armor-plated black Mercedes parked outside."

Now, Number 7 Winnington Close is being guarded in a different way, and it is occupied constantly. Roughly half a dozen Libyan nationals seized the house in early March—they claim they entered through an open window—and they say they are looking after the house for what they say are its rightful owners: the Libyan people.

While squatters have taken over the mansion in London, it isnt clear whether that has happened at other Qaddafi properties. European and U.S. authorities have frozen tens of billions in Libyan assets, but tracing those assets is no easy task.

Asked how long they are prepared to stay in the London house, Tripoli native Akbar ben Ramadan, who normally works as a motor vehicle inspector and part-time radio host in Manchester, England, says, "as long as it takes."

That may sound easy given the home's luxury features (the movie theater is reportedly lined with suede leather), the squatters insist they are not taking advantage of their posh surroundings.

Even the jacuzzi stays turned off, "to save electricity for the Libyan people," says Belkasen Alghilyni, who also refers to himself as "Billy." Members of the group bristle at the idea that some are more interested in the features of the home than they are in the group's cause.

The home's multi-million dollar price tag "would be enough to refurbish three or four schools" in Libya, ben Ramadan says.

The ultimate fate of the home is unclear, of course. Because of the ownership structure, it is not even a given that it is covered by a global freeze on some $40 billion of assets controlled by the Qaddafi regime.

And the home, which would represent a tiny fraction of Libya's holdings, may be one of the simpler properties to unwind. Most of the assets can't be seized by squatters.

In London alone, Libya's sovereign weath fund—the Libyan Investment Authority—owns some pricey and high profile real estate, including Portman House, a 150,000 square foot office building that serves as the British headquarters of oil giant ConocoPhillips. The Libyan Investment Authority bought the building in 2009 for a reported $250 million.

Another office building, 14 Cornhill Street, proudly overlooks the Bank of England in the heart of London's financial district.

Critics say the Libyan Investment Authority, which is believed to control as much as $70 billion in assets, is the personal piggy bank for the Qaddafi family.

At the anti-corruption watchdog group Global Witness, they say Libya's situation is all-too-typical of regimes that are rich in resources like oil. And the group says Western governments that are now freezing assets were in many ways complicit, since much of the financing could not be completed without the help of institutions in places like the U.S. and Great Britain.

"There's a pinstripe army of lawyers, bankers and accountants," says Robert Palmer, who heads Global Witness' kleptocracy campaign.

Despite high-profile efforts to curb global corruption, including an anti-kleptocracy initiative launched by the U.S. Justice Department last year, Palmer points out that it is still legal in nearly every state to set up a corporation without identifying who is behind it.

And a Senate investigation last year found significant gaps in U.S. anti-money laundering laws. For example, the investigation found some foreign leaders funneling assets into the U.S. through attorney-client accounts, which are subject to less scrutiny than typical bank accounts.

But some are less concerned about where the money comes from.

"Frankly, it's none of our business," said Trevor Abramsohn, president of Glentree International in London, which deals in high-end properties in neighborhoods like Hampstead Garden.

Abramsohn says London has become an essential place for the rich and powerful to own property, thanks to its status as a global center of finance and culture.

In addition to the Qaddafis, Gamal Mubarak, the son of the deposed Egyptian president, reportedly own a home in London's super-rich Belgravia section, though a woman who answered an intercom at the home would only say it is a "private residence" and that Mubarak does not live there.

Abramsohn says many buyers, including world leaders and their families, do buy property in their own name. More often, he says, they will purchase it through an offshore corporation, both for "tax efficiency" and anonymity. And Abramsohn says people in his business know not to ask too many questions.

"Who are we to judge," he says.