Gaddafi's companies still trading in UK despite sanctions
Libyan companies controlled by Colonel Muammar Gaddafi and his cronies are still trading
The Treasury has admitted that it is handing out special licences to enable the companies to carry out day-to-day business.
The disclosure will seriously embarrass the Government which is already accused of going soft on Moussa Koussa, the former Libyan intelligence chief and foreign minister who had sanctions against him lifted last week.
Lord Trefgarne, chairman of the Libyan British Business Council, said: "I am not quite sure what these sanctions achieve. It sends out the right message but not much more.
"The Libyan government is not short of money; they have substantial reserves which will keep them going for a long time."
The firms under sanction are listed on a HM Treasury document issued last week. Their assets are officially frozen under both European Union and United Nations rulings.
The list gives some insight into the Libyan Government's business deals in the mainland UK and elsewhere, including tax havens such as the Isle of Man and the British Virgin islands.
One company is based in a Georgian townhouse opposite the US embassy in London; another is registered to a Buckinghamshire farmhouse.
The organisations under sanction include Dalia Advisory Limited, the UK-based subsidiary of the Libyan Investment Authority (LIA), the sovereign wealth fund with £80 billion to invest and which is said to be under the Gaddafi family's control.
The LIA is working in a joint partnership with a British company to build a £30 million hotel complex in a deal rushed through in September in order to be ready in time for the London Olympics next year.
The Sunday Telegraph has learnt that the Treasury is planning to grant a licence this week, allowing the LIA to release funds to continue with the build in Maple Cross in Hertfordshire.
The 220-room hotel, when completed, will provide employment for 400 people.
The deal was put together by Clifford Chance, the magic circle law firm, in September last year which acted for the LIA. The Libyans have a 50 per cent stake in the hotel.
Hertford King, whose family business owns a golf course and hotel complex at Stoke Poges and whose company is in partnership with the LIA, said he was unable to comment on the Libyan deal for legal reasons.
He said he would be able to do so this week but refused to say if the deal hinged on a licence from the Treasury.
A Treasury spokesman said last night: "We cannot comment on individual businesses but it is most likely that work will continue.
If Dalia has a stake in something such as a construction site the Treasury and the Financial Services Authority would examine their involvement and if it has a reason to breach sanctions.
"We wouldn't necessarily stop the building work. We can issue a special licence."
Other British-based companies under sanctions are also understood to be still trading despite the freeze on assets.
They include another LIA subsidiary Sabtina Ltd, based in an office block in Milton Keynes, a property management company, with more than £5.5 million in cash in the bank according to its latest accounts.
Jawaby Property Investment Limited (JPIL), whose registered office is a farmhouse just outside High Wycombe in Buckinghamshire, is also understood to be carrying on trading under a special licence despite being under sanctions.
JPIL is a subsidiary of Libya's National Oil Company, which is also under Colonel Gaddafi's control. The company has assets of almost £14 million, according to its last accounts.
Eamon Nally, who runs his busines Intax Libya Chartered Accountants from the farmhouse where Jawaby is registered, said: "I won't comment on whether JPIL are still trading but being on this list doesn't mean you can't trade. It means your assets are frozen and can't be dispersed in any way.
"The business itself doesn't have a specific trading location in the UK. The sanctions themselves don't necessarily impact the trading of the company. It just means that any transactions have to be approved by HM Treasury."
Another subsidiary of NOC - Tekxel Ltd - whose registered address is the London-based law firm Eversheds, had a turnover of £28.7 million and gross profits of almost £12 million.
The company was restructured in 2009, ceasing its oil and gas industry work and instead turned itself into a property management company, buying Holborn Tower in central London.
It is not clear if Tekxel has been given a licence to carry on trading.
The Treasury said property management companies would also - in general - be given licences to carry on collecting rent. Otherwise tenants could get away without paying.
The Treasury also hopes that the British subsidiaries will remain viable so that should Col Gaddafi eventually lose power, the businesses can be put under the control of the next Libyan government.
"If companies have to pay rent or receive rent that will most likely continue and we will issue them with a specific licence to do that," said the spokesman. "We don't want to destroy businesses.
"The idea is that money is returned to the Libyan state at some point."
The Treasury said sanctions were in place to prevent money being sent back to Libya or else moved by the country's leaders to private accounts overseas.
