Econostrum | Economic News in the Mediterranean

Lebanese justice prohibits the governor of the Central Bank of Lebanon to leave the country

Written by Frédéric Dubessy on Thursday, January 13th 2022 à 11:50 | Read 370 times

Once adored, the governor of the Central Bank of Lebanon is now reviled (photo:DR)
Once adored, the governor of the Central Bank of Lebanon is now reviled (photo:DR)
LEBANON. Riad Salamé was banned from leaving Lebanon on Tuesday, January 11, 2022 by Ghada Aoun, public prosecutor at the Court of Appeal of the Mount Lebanon region (centre). Governor of the Central Bank of Lebanon (BDL) since August 1, 1993 (reappointed three times in 1999, 2005 and 2011), the seventy-one year old man has been implicated since April 2021 by the Lebanese judiciary for suspicions of money laundering and transfer of funds abroad.

This decision by the Lebanese judiciary, which is preparing to question him, shows that the noose is tightening around him. He is also the subject of several proceedings in France and Switzerland, notably for alleged money laundering operations within the Central Bank but also on the origin of his personal fortune and that of his family.

Riad Salamé is the target of the group "The people want the reform of the system" created in October 2019 at the beginning of the protests in the country of the Cedar and which has filed a civil suit. Twelve lawyers specialising in business and public finance issues are members of the group and have filed a complaint against Riad Salamé for "breach of professional duty, negligence, illicit enrichment, money laundering and fraud".
The Swiss foundation Accountability Now, which specialises in the fight against impunity for financial crimes, filed a complaint in May 2021 before the French courts. A few weeks later, the NGO Sherpa and the association "Collectif des victimes de pratiques frauduleuses et criminelles au Liban" (led by Franco-Lebanese) referred the case to the French National Financial Prosecutor's Office (PNF) because several victims and defendants have dual Lebanese and French nationality, as does Riad Salamé. The people targeted by this complaint also include the governor's son, Nadi Salamé, his younger brother Raja Salamé and Marianne Hoayek, his closest collaborator at the BDL.

According to Sherpa and the Collective, Riad Salamé has built up a fortune of several hundred million euros, of which 35 million euros are invested in France, mainly in real estate.

BCL and Ponzi scheme?

In July 2021, the PNF opened "a judicial investigation against X on charges of organised money laundering and criminal association". The NGO and the Collective also point out "the suspicious conditions under which private or public Lebanese officials have acquired real estate, sometimes very luxurious, on French territory in recent years". And they assure that the "final objective of this procedure of ill-gotten gains is the restitution of assets to the Lebanese population that has been robbed and the fight against corruption".

On 16 December 2021, the two partners in the legal battle also filed a complaint with the Luxembourg Public Prosecutor's Office concerning "the suspicious conditions under which Lebanese private or public officials have acquired colossal fortunes in recent years, thanks in particular to the use of offshore arrangements and the holding of Luxembourg companies".

In 2020, the NGO Transparency International, measuring the degree of perception of corruption, ranked Lebanon 149th out of 180 countries. A year earlier, the American polling institute Gallup revealed that 93% of Lebanese considered their government to be corrupt.

The Central Bank's operating system is sometimes referred to as a Ponzi scheme (paying older clients with money from new clients), because of its policy of regularly resorting to debt in order to pay back the interest on late payments already accumulated. The country has been in default since 7 March 2020 and is, according to the World Bank, going through "one of the worst crises in the world since 1850". However, Riad Salamé was once, in the 1990s and 2000s, adulated for his policy of parity between the Lebanese pound and the US dollar, which offered a golden age to the Lebanese until 2011 and the beginning of the war in Syria.

Offshore companies in tax havens

Faced with the numerous accusations, the dean of central bank governors remains on the same line of defence, assuring that his "fortune is clear and documented". In November 2021, he had still declared "I have been a successful banker for almost twenty years, and nothing prevents me from investing and developing my own fortune." According to his own words, he amassed a fortune of $23 million during his career as a wealth manager in the American investment bank Merrill Lynch (Paris and Beirut offices from 1973 to 1993).

His clients included former Lebanese businessman and Prime Minister Rafik Hariri (assassinated in February 2005 in the Lebanese capital) who first appointed him to his post at the Central Bank some 30 years ago. His son, Saad Hariri, was twice President of the Council of Ministers before being forced to resign in October 2019 after the start of anti-corruption protests and rejection of the political system. Appointed at the end of October 2020 by the President of the Republic Michel Aoun to form a new government, he failed in his task in March 2021 allowing the billionaire Najib Mikati to run for the post at the end of July 2021 and to succeed in proposing a team in September 2021, after thirteen months of waiting.

In October 2021, the Pandora papers (an investigation by the International Consortium of Investigative Journalists (ICIJ) fuelled by the leakage of 11.9 million financial documents), had revealed that Riad Salamé - like Najib Mikati and Hassane Diab - owned offshore companies (Amanior founded in 2007 and of which he is the director, Toscana created in 2013 and owned by his son) in tax havens with the help of the firm Trident Trust. The governor was already on the Panama Papers list in 2016 which cited the brokerage firm Forry Associates Limited set up by his brother Raja.

Meanwhile, since March 2020, several Lebanese political parties point to the governor as responsible for the bankruptcy of the state and the inexorable fall of the Lebanese pound which has lost 95% of its value against the US dollar since 2019.

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