Malta has initiated procedures to release millions of euro in Libyan frozen assets after the EU yesterday agreed to partially remove an arms embargo, unlock frozen Libyan Central Bank and Libyan Investment Authority (LIA) funds and lift a ban on Libyan aircraft landing at EU airports.

In a statement, the EU said the decision to release previously frozen funds “for humanitarian and civilian needs” was taken “to support renewed activity in the Libyan oil and banking sectors and to assist with building a civilian government.”

Senior government officials last night said now that the assets had been unfrozen there was a whole procedure to be followed, which included negotiations with the Libya’s National Transition Council (NTC) and consent by the sanctions committee of the UN.

Contacted by The Times while attending the UN General Assembly in New York, Foreign Minister Tonio Borg said Malta, through the Attorney General’s office and the Sanctions Committee, had already started to untangle the difficult legal problems connected to the €377 million of frozen assets.

“We have worked together with the EU to lift these sanctions and now we are doing our utmost to release this money as soon as possible to help the new Libyan government. However this is not a straightforward thing as the proper procedures have to be followed,” Minister Borg said.

Lafico (Libyan Arab Foreign Investment Company) has a number of investments in Malta, including in the Corinthia Group and other hotels, such as The Vivaldi and Milano Due. Its portfolio also includes minority shareholding in manufacturing companies such as Medelec Switchgear and services related companies like Medavia.

However, through an agreement negotiated by Malta with the EU, these companies were not directly hit by the sanctions as they were only barred from paying dividends to their Libyan shareholders while carrying on with their business.

The €377 million in assets frozen by Malta include €86 million owned directly by members of the Gaddafi family.