Howard Davies quits over Libya

FORMER Bank of England deputy governor Sir Howard Davies resigned as director of the London School of Economics yesterday over its links with the Gaddafi family.

Davies, who was also the first chairman of the Financial Services Authority, stepped down amid growing pressure on the LSE for accepting a £1.5m funding pledge from a Gaddafi family charity.

The university received £300,000 of the money. The LSE also said it had arranged a £2.2m deal with Libya’s National Economic Development Board to train diplomats.

Davies, who was paid $50,000 (£30,700) for advising the Libyan Investment Authority in 2007, said he was aware the LSE’s reputation had “suffered”.

“There were risks involved in taking funding from sources associated with Libya and they should have been weighed more heavily in the balance,” his resignation letter said.

The university has launched an independent inquiry into its relationship with Libya and Gaddafi’s son Saif al Islam. Davies’ resignation came after the Treasury froze the assets of a further 20 of Gaddafi’s top officials yesterday including his two spy chiefs and the head of his personal security.

The asset freeze now covers 26 Libyan regime members and an estimated £2bn of assets, government sources said. The names are published on the Treasury’s website.