WASHINGTON » In 2009, top aides to Moammar Gadhafi called together 15 executives from global energy companies operating in Libya’s oil fields and issued an extraordinary demand: Shell out the money for his country’s $1.5 billion bill for its role in the downing of Pan Am Flight 103 and other terrorist attacks.

If the companies did not comply, the Libyan officials warned, there would be “serious consequences” for their oil leases, according to a State Department summary of the meeting.

Many of those businesses balked, saying that covering Libya’s legal settlement with victims’ families for acts of terrorism was unthinkable. But some companies, including several based in the United States, appeared willing to give in to Libya’s coercion and make what amounted to payoffs to keep doing business, according to industry executives, U.S. officials and State Department documents.

The episode and others like it, the officials said, reflect a Libyan culture rife with corruption, kickbacks, strong-arm tactics and political patronage since the U.S. reopened trade with Gadhafi’s government in 2004. As U.S. and international oil companies, telecommunications firms and contractors moved into the Libyan market, they discovered that Gadhafi or his loyalists often sought to extract millions of dollars in “signing bonuses” and “consultancy contracts” — or insisted that the strongman’s sons get a piece of the action through shotgun partnerships.

“Libya is a kleptocracy in which the regime — either the al-Qadhafi family itself or its close political allies — has a direct stake in anything worth buying, selling or owning,” a classified State Department cable said in 2009, using the department’s spelling of Gadhafii.

The wealth that Gadhafi’s family and his government accumulated with the help of international corporations in the years since the lifting of economic sanctions by the West have helped fortify his hold on his country. While the outcome of the military intervention under way by the U.S. and allied countries is uncertain, Gadhafi’s resources — including a stash of tens of billions of dollars in cash U.S. officials believe he is using to pay soldiers, mercenaries and supporters — may help him avert, or at least delay, his removal from power.

The government not only exploited corporations eager to do business, but willing governments as well. Libya’s banks apparently collected lucrative fees by helping Iran launder huge sums of money in recent years in violation of international sanctions on Tehran, according to another cable from Tripoli included in a batch of classified documents obtained by the anti-secrecy group WikiLeaks. In 2009, the cable said, U.S. diplomats warned Libyan officials that its dealings with Iran were jeopardizing Libya’s enhanced world standing for the sake of “potential short-term business gains.”

In the first few years after trade restrictions were lifted — Gadhafi had given up his country’s nuclear capabilities and pledged to renounce terrorism — many U.S. companies were hesitant to do business with Libya’s government, officials said. But with an agreement on a settlement over Libya’s role in the Pan Am bombing over Lockerbie, Scotland, finally reached in 2008, officials at the U.S. Commerce Department began to serve as self-described matchmakers for U.S. businesses.

At least a dozen U.S. corporations, including Boeing, Raytheon, ConocoPhillips, Occidental, Caterpillar and Halliburton, gained footholds, or tried to do so. In May, the Obama administration and the Gadhafi government signed a new trade agreement, designed, according to Gene Cretz, the U.S. ambassador to Libya, to “broaden and deepen our bilateral economic relations.”

Libya became so flush with cash that Bernard Madoff, the New York financial manager who stole billions of dollars in a long-running Ponzi scheme, approached officials overseeing the country’s $70 billion sovereign fund a few years ago about an “investment opportunity,” according to a State Department summary of the episode in 2010. “We did not accept,” a Libyan official reported.

Gadhafi, the State Department said, was personally involved in many business decisions. He worked with local “riqaba” councils, an oversight committee set up by the Libyan government to dole out business with foreign firms, and insisted on signing off on all contracts worth more than $200 million. He also learned how to hide money and investments in case sanctions were ever imposed again, as they recently have been.

Gadhafi and his family set up accounts in banks around the world that are in the names of members of Libyan tribes that remain loyal to his government, said Idris Abdulla Abed al-Sonosi, a member of the exiled Libyan royal family, who is familiar with many of Gadhafi’s business dealings. (Some accounts may have been frozen by Swiss, U.S. and other authorities, who have blocked access to tens of billions of dollars.) And Gadhafi relatives adopted lavish lifestyles — including posh homes, Hollywood film investments and private parties with American pop stars.

When Gadhafi was not making the decisions, one of his sons — whom he has anointed to run various sectors of the country’s economy — often was.

Daniel Karson, executive managing partner at Kroll, a risk-consulting firm, recalled in an interview that an international communications company he represented tried to enter the Libyan cellular phone market in 2007. From the outset, Libyan officials made it clear that the foreign company’s local business partner would have to be Muhammad Gadhafi, the eldest son of the Libyan ruler.

“We advised them they would have to go through Muhammad Gadhafi,” said Karson, who declined to identify the client. “This was not going to be done on the basis of, as they say in retail, price, quality and delivery.” Fearful of going into business with the Gadhafi family, he said, the company made no investments in Libya.

Coca-Cola got caught in the middle of a fierce dispute between Muhammad Gadhafi and his brother Mutassim over control of a bottling plant the soda maker had opened in 2005, forcing it to shut down the plant for months amid armed confrontations, a diplomatic cable noted.

And Caterpillar, the Illinois machine maker, was about to finalize a lucrative deal in 2009 to provide heavy equipment for infrastructure projects when Libya demanded that the company become a partner with a state-owned company controlled by the Gadhafis, according to the State Department documents. Caterpillar resisted and was blocked by Libya from the work after intervention by U.S. diplomats failed to break the impasse.

When Gadhafi aides demanded payment for the Lockerbie settlement from oil companies operating in Libya, a State Department cable in February 2009 reported, industry executives had indicated “that smaller operators and service companies might relent and pay.” Several industry officials and someone close to the settlement, all speaking only on condition of anonymity, said the payments went through but declined to identify the businesses.

Other companies also struck costly deals with the government. In 2008, Occidental Petroleum, based in California, paid a $1 billion “signing bonus” to the Libyan government as part of a deal that granted the company five oil exploration and production contracts. A company spokesman did not respond to requests for comment.

The year before, Petro-Canada, a large Canadian oil company, made a similar $1 billion payment after Libyan officials granted it a 30-year oil exploration license, according to diplomatic cables and company officials.

The company also hired Jack Richards, a business consultant based in the British Virgin Islands and close friend of the Gadhafis, as their local agent to cement the deal, according to The Globe and Mail, a Canadian newspaper. Richards, who could not be reached for comment, reportedly used shooting trips to British royal estates to win the family’s support. A spokesman for Petro-Canada confirmed Richards worked as a company consultant but said he had no information about his relationship with the Gadhafi family.

The company also courted a Gadhafi son, Seif al-Islam. Petro-Canada sponsored an exhibit of his paintings — ridiculed by Canadian critics as “lurid” and a “triumph of banality” — after museums refused. A Montreal business, SNC-Lavalin, which won more than $1 billion in Libyan contracts, also sponsored the exhibit and a soccer team that hired another Gadhafi son, Saadi, as a player.

In Norway, two top officials at the state-run oil company quit in 2007 and came under government investigation after it was revealed the company had made more than $7 million in apparently illegal “consultancy agreements” with Libya. In the U.S., no charges involving Libyan business dealings have been brought under the Foreign Corrupt Practices Act, which bans bribing foreign officials to gain business. The Justice Department declined to comment.

Looking back on the decision in 2004 to resume business dealings with Libya, Juan Zarate, a former top White House and Treasury official in the administration of President George W. Bush, said officials had believed then that the benefits of trying to rehabilitate Gadhafi outweighed the obvious risks. “It was a deal with the devil,” Zarate said.

“The hope was that with normalization, Gadhafi would serve less as the mad dog of the Middle East and more as a partner,” he added. “But I don’t think this is the way anyone would have wanted it to work out.”

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