Libyan strongman Muammar Gaddafi, who was killed in 2011 | Pascal Le Segretain/Getty Images Belgium raised ‘liberating’ Libyan funds as it sought cash for companies The UN has accused country of acting illegally by allowing money to flow from Gaddafi’s accounts.

Belgium asked Libya to settle debts owed to Belgian firms from the Gaddafi era while also raising the prospect of allowing payments from funds frozen by sanctions, a letter from Foreign Minister Didier Reynders has revealed.

Belgium's government is under increasing pressure to explain why it allowed hundreds of millions of euros in interest to flow to unknown recipients from frozen accounts in Brussels that belonged to Muammar Gaddafi's regime, which was toppled in 2011. The U.N. concluded in September that Belgium had broken the law by allowing such payments, which were made between 2012 and 2017.

One possible explanation for Belgium's decision emerged on Wednesday after POLITICO and Belgian media obtained the letter from 2012, in which Reynders spelled out to the Libyan government that he wanted the bills of Belgian companies to be paid after mentioning the possibility of the frozen funds being unblocked.

Reynders wrote to Foreign Minister Achour Ben Khayal that Belgian troops had helped liberate Libya and "in this spirit" he now wanted to inform him about Libyan assets in Belgium. He noted the technical possibility "to liberate" these frozen assets, and then mentioned debts of a number of Belgian companies, including gunmaker FN Herstal and another business in the defense sector.

In the letter dated August 1, 2012 Reynders explains to Ben Khayal that there is a "formal possibility" under EU sanctions laws "to liberate frozen assets for inter alia humanitarian objectives."

Reynders attached a list of nearly €30 million in outstanding payments to eight Belgian companies. "In order to settle these arrears, I would greatly appreciate it if you could provide me with the payment orders for each individual contract. This will undoubtedly improve the conditions related to export finance and facilitate further commercial activities between our two countries," he wrote.

It is unclear, however, whether any of the money ultimately released from the Libyan accounts by Belgium was used to pay these specific debts. David Maréchal, a spokesperson for Reynders, said the minister has no knowledge of any decision to unfreeze the funds or whether Belgian businesses had been paid.

"We don't know anything. It's not the foreign affairs minister that would know this," he said. "The foreign affairs ministry does not unblock money."

Reynders rejects wrongdoing

In a letter on February 12 this year to Eric Van Rompuy, chairman of the Belgian parliament’s finance committee, Reynders played down any link between unfreezing of funds and the debts owed to companies in Belgium. He also sought to pass responsibility to the finance ministry.

Referring to the letter to Ben Khayal, Reynders said: “I want to draw your attention to the fact that this letter was written during a period and in a context in which, in accordance with the applicable rules, the possibility to unfreeze these funds for humanitarian projects in favor of the Libyan population was being studied. That required, however, the cooperation of the Libyan authorities," Reynders wrote. “I also take the opportunity to repeat once more that the freezing or releasing of funds in Belgium falls under the competence of the finance minister."

The letter is the latest development in a battle over funds belonging to the Libyan Investment Authority (LIA) but located in Belgium.

Sophie Dardenne, director of CK Technology, which sells shooting range equipment and appeared on the list in Reynders' letter, said her company has never received full payment from Libya but this is because business in the country was never carried out.

She said that CK Technology signed a contract with the Libyan state for €4.2 million. It received an advance of €600,000, an amount she said remains blocked in a bank account due to international sanctions.

"This money is blocked but as the contract was not executed it's logical that it is reimbursed at some point," she said, adding that the contract was originally for gear designed to protect Libyan security forces.

Officials at the Belgian gunmaker FN Herstal — another company on the list, said to be owed €536,087 — did not respond to calls. Other companies on the list were involved in sectors such as poultry, water and satellite communication.

The emergence of Reynders' 2012 letter is the latest development in an ongoing domestic and international battle over funds belonging to the Libyan Investment Authority (LIA) but located in Belgium.

"The Belgian government and European authorities must collaborate with the parliament so that light is shone on this issue" — Georges Gilkinet, Belgian Green MP

Last year, a U.N. panel of experts on Libya said that Belgium is in violation of international sanctions targeting the assets once owned by Gaddafi by paying out interest and other earnings from the funds.

The panel said that considering the instability in the country, the disputes over the authority of the LIA and the lack of an oversight mechanism, unfreezing money "could lead to the misuse and misappropriation of funds."

Confusion around the legal status of the EU's sanctions regime on Libya has played into the dispute over whether the release of the money was in accordance with international law.

A senior EU official said that at a meeting of RELEX, an expert group at the Council of the EU composed of diplomats from member countries, on October 20, 2011, Belgium asked whether the interest on Libya's sovereign wealth generated after September 16, 2011 was not subject to asset freeze. "The representative of the Council legal service indicated that, in his view, this was the correct interpretation of the EU legal acts," the official said.

Georges Gilkinet, a Green party member of the Belgian parliament’s finance and budget oversight committee, said Reynders has serious questions to answer.

"Mr. Reynders has always declared that he has not intervened in the matter of unfreezing Libyan funds. We see, however, with his letter to the Libyan authorities that he was at the center of the question," he said. "What was the content of the discussions that he held with Libyan authorities before sending this letter? ... The Belgian government and European authorities must collaborate with the parliament so that light is shone on this issue in which Belgium is the only state not to have respected its international obligations."

Gilkinet said that both Reynders and Steven Vanackere, who was finance minister in 2012 when the funds were unfrozen, would be summoned to answer questions by the Belgian parliament in March. Vanackere, a member of the CD&V party who is currently a director at Belgium's central bank, has denied knowing anything about funds being unfrozen in Belgium.

However, a letter from the Belgian finance ministry to Euroclear — a financial institution headquartered in Brussels — dated October 4, 2012 showed Marc Monbaliu, a top civil servant at the ministry, saying that "the legal department of the European External Action Service of the European Union considers that there is no longer any legal basis to freeze interest on the Belgian funds."