Austria's Central Bank froze the assets of a key associate of one of Libyan leader Moammar Gadhafi's sons on Friday after a newspaper reported the official may have transferred money from Austria to benefit the Gadhafi clan.
The associate, Mustafa Zarti, dismissed the allegations against him as "rumors, without any foundation."
In a telephone interview shortly after he was questioned by Austrian police Friday, Zarti also said he recently resigned as deputy chairman of Libya's multibillion-dollar Libyan Investment Authority and that he would take legal action against the Central Bank's decision.
The Central Bank order freezing Zarti's personal assets described him as a "close ally of the Libyan regime," and Austrian authorities asked the European Union to add his name to a list of 26 people under sanctions meant to prevent them from accessing funds across the 27-nation EU. That list includes Gadhafi, his immediate family and close associates.
Zarti, a 40-year-old Libyan who spent part of his youth in Vienna and holds an Austrian passport, said he arrived in this country on Feb. 21 to join his wife.
Headquartered in Tripoli, the Libyan Investment Authority is a holding company that is formally overseen by the Libyan government and manages funds in various sectors, including agriculture, real estate, energy, shares and bonds. In formal financial terms, it is a sovereign wealth fund.
Austria's daily Die Presse reported this week that the Gadhafi clan may have invested 30 billion euros _ more than $40 billion _ in Austria, and that Zarti, a friend of Gadhafi's son Seif al-Islam Gadhafi, may have transferred assets through Austrian trusts. The report did not say whether that allegedly happened before or after Libya's popular uprising began on Feb. 15.
Zarti described those reports as "absolutely not true" and said his only connection to the Gadhafi clan was through his personal friendship to Gadhafi's eldest son and heir apparent, adding he has had no recent contact with him.
Zarti said he resigned from the Libyan Investment Authority eight days ago, describing it as a fund meant to funnel excess oil wealth to benefit future Libyan generations. He said the fund had assets of about $65 billion _ over 46 billion euro _ but its Austrian assets were minor.
He said he had no authority to transfer funds from the authority, saying such transactions must go through a board of trustees and others "in a hierarchy of decision making."
Police Col. Rudolf Golia, an Austrian Interior Ministry spokesman, said Friday that police are interested in Zarti's "contacts to the Gadhafi clan" and are trying "to clear up any potential financial links" between Zarti and members of the Libyan leader's family as part of an investigation of assets in Austria held by Gadhafi associates.
Golia declined further comment.
Asked about his questioning, Zarti said police were only interested in his security.
"They said, 'We are here only for your safety if you need anything,'" Zarti said.
A Central Bank statement earlier this week said Austrian financial institutions had 1.2 billion euros _ about $1.7 billion _ in deposits from Libyan clients, without specifying if any of the money was traced to the Gadhafis.