A new “Tour de Force” was applied by former Central Bank (BDL) Governor Riad Salameh’s lawyers. On August 2, the acting first investigating judge in Beirut, Charbel Abu Samra, made a decision to postpone the investigation session with Salameh without arresting him. The Cases Authority considered this an implicit decision to absolve Riad Salameh, which prompted it to appeal the decision before the Indictment Division in Beirut, which in turn accepted the appeal.
On February 23, 2023, Appellate Advocate General in Beirut Raja Hamoush charged Salameh, his brother Raja and his assistant Marianne Howayek, with money laundering, embezzlement, tax evasion, and forgery. This charge follows approximately two years of investigations, which began after a letter was received from the Swiss Federal Public Prosecution in late 2020.
Three litigation cases were filed by Salameh’s agent, lawyer Hafez Zakhour, before the General Assembly of the Court of Cassation against the Lebanese state, on the grounds of what he considered to be mistakes on the part of the judges in the three indictment bodies. Not only did Salameh, who did not attend the investigation session, quarrel with the three judges, but he also filed two dispute lawsuits against the two other bodies.
Salameh’s lawyers are using the same tactics that led to the drop of charges against former finance minister Ali Hassan Khalil on the same grounds. Lebanese lawmaker Ali Hassan Khalil, charged in December 2020 over the Beirut port blast, sued the head of the country’s Supreme Judicial Council on the grounds of incompetence. MPs Ghazi Zeaiter and Ali Hassan Khalil filed new appeals against the investigating judge, Tarek Bitar. The appeals against Bitar include abuse of power and breach of job duties, provoking sectarian and racial strife, and usurping administrative authority.
At the time, Diana Semaan, Amnesty International’s Acting Deputy Director for the Middle East and North Africa, said “The current investigative judge is still unable to question or prosecute Ghazi Zeaiter and Ali Hassan Khalil as they both enjoy parliamentary immunity. We reiterate our calls to the Lebanese authorities to immediately lift all immunities granted to officials, regardless of their role or position, in order to comply with its obligation to ensure redress for violations of the right to life.”
Appointed in 1993, Salameh helped build a rentier economy from the ashes of Lebanon’s devastating civil war. He was praised for the relative stability he offered the system and was the recipient of multiple awards as “Central Bank Governor Man of the Year,” – mostly from international media and the Union of Arab Banks.
The decision comes along a proposition from the Coalition for the Independence of the Judiciary which, in cooperation with a number of deputies, proposed a law to amend Article 751 of the Civil Procedure Code, which allows cases to be suspended as soon as one of the litigants submits a claim to litigate the state, given that it is used by influential people to obstruct investigations against them.
The only hope today to sue officials comes from outside the country’s borders. Salameh is also the focus of judicial investigations in Lebanon, the US and at least seven European countries probing allegations of financial crimes, to of which have issued warrants for his arrest. On August 10, he was sanctioned by the US, UK, and Canada. The US attorney’s office in the Southern District of New York has also opened an investigation into Salameh. On April 10 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) asserted that “Salameh’s corrupt and unlawful actions have contributed to the breakdown of the rule of law in Lebanon.” “Salameh abused his position of power, likely in violation of Lebanese law, to enrich himself and his associates by funneling hundreds of millions of dollars through layered shell companies to invest in European real estate.”
If the US imposed sanctions on Salameh when he was still governor, they might have disrupted the already collapsing financial situation in Lebanon, causing harm to the system as a whole. Beyond the timing of the imposed sanctions, the significance lies in the message and symbolic value.
In Lebanon, the Special Investigation Commission (SIC) for fighting money laundering and terrorism financing issued an order to freeze the bank accounts of Salameh and his associates and lift banking secrecy on them. The SIC is Lebanon’s financial intelligence unit. Its duties include conducting financial inquiries, freezing accounts, reporting dubious transactions to legal bodies, and pursuing cases of money laundering.
Salameh is also being prosecuted by Germany for corruption, forgery, money laundering and embezzlement.
Prior to the German arrest warrant, the French National Financial Prosecutor’s Office (PNF) had issued an arrest warrant for Salameh on May 16. Interpol subsequently issued a Red Notice for Salameh at France’s request. Interpol cannot arrest an individual without the authorization of the prosecutor handling the case. Beirut has ignored similar notices by the global police agency in the past, including two issued against auto tycoon Carlos Ghosn in 2020 and 2022. In 2020, Switzerland launched an investigation, followed in 2021 by Lebanon, France, Germany and Luxembourg. Authorities in Monaco, Liechtenstein, Belgium, the US and the UK are also probing Salameh’s activities.
Lebanese authorities also lead their own probes into alleged financial crimes committed by Salameh. In March last year, Judge Ghada Aoun charged him with illicit enrichment. A year ago, she charged him with mishandling foreign currency and breach of trust.
Investigators in Europe are also looking into the extent to which banks were involved in these schemes “suspicious transactions”, interest-free loans and “arrangements to obscure losses,” according to OFAC. Salameh turned to what he called “financial engineering,” essentially incentivizing commercial banks to increase their dollar deposits at the BDL, with interest rates of up to 12 percent, in order to shore up the large stock of foreign reserves that were key to the currency’s stability. In turn, banks offered extremely high-interest rates to their customers on multiyear deposits.
Maan Barazy is an economist and founder and president of the National Council of Entrepreneurship and Innovation. He tweets @maanbarazy.
The views in this story reflect those of the author alone and do not necessarily reflect the beliefs of NOW.
