SCOTTISH prosecutors have been asked to help investigate claims Highland hotels were bought with money embezzled from Libya by an ally of Muammar Gaddafi.
The Crown Office has received a request for assistance from authorities in the troubled North African state trying to track down missing millions destined for hospitals and other public projects.
Libyan officials claim Ali Ibrahim Dabaiba, a member of Gaddafi’s inner circle, spent some of this money on property in the UK, including the landmark Kenmore Hotel on Loch Tay, according to reports in The Guardian newspaper.
However, the firm which runs the Kenmore, The Aurora Hotel Collection, has denied the Libyan allegations as “ludicrous”. Mr Dabaiba, who has lived in London since 2011, the year the Gaddafi regime collapsed, is also understood to deny any wrongdoing.
A lawyer for his family has denied there is any investigation into his activities in Libya.
The Guardian said it had seen a 2014 request from Libya to the Crown Office for assistance.
The newspaper reported that in the document Libya’s recently retired attorney general Abdulkader Radwan claimed “huge amounts of money” may have been “illegally transferred to the banks in Britain and Scotland”.
Mr Radwan’s staff, the paper added, are investigating whether Mr Dabaiba was involved in embezzlement of public money, money laundering and abusing a public office.
The request for assistance, according to The Guardian, says the Aurora group and other businesses “may contain assets belonging to the State of Libya”.
Steven McLeod, chief executive of the Aurora Hotel Collection said “We categorically refute the allegations which have been levelled against the company and the directors of the Aurora Hotel Collection vigorously deny any wrongdoing.
“These claims are both ludicrous and hugely damaging to the company and the directors.”
Two of the directors of Aurora have also been directors of a company called Marco Polo Storica, which received contracts from the Libyan government to plan the restoration of historic sites.
A Scottish Crown Office spokesman said: “We can confirm we have received a request for mutual legal assistance from the Libyan authorities.
“As this relates to an ongoing investigation it would not be appropriate to comment further.”
The Guardian also reported that US-based asset trackers working for Libya had identified a network of more than 100 companies in the UK or tax havens connected to Mr Dabaiba’s family or associates.
The paper said more than 40 of them are in Scotland.
There has been growing concern in Scotland over the last year that Scottish shell companies, formally controlled from traditional fiscal paradises, have been used to funnel money out of the Middle East, central Asia and eastern Europe.
Scottish prosecutors signed a deal of mutual legal assistance with Libya in early 2014.
The outgoing Lord Advocate Frank Mulholland said last week that he was hopeful of a second trial of Libyan nationals who Scottish and US authorities believe to be responsible for the Lockerbie bombing of 1988. There are outstanding letters of request to Libya, which include a request to interview the two suspects, who are currently being held in custody.
The two men have not been named but they are understood to be Abdullah Senussi, Gaddafi’s former intelligence chief, and Abouajela Masud.