In Europe and Lebanon, investigations are underway against the manager of the Banque du Liban, Riad Salameh. He is suspected of money laundering and corruption, and is also blamed for the financial crisis in the country. But Salameh is convinced that he has been made a scapegoat.
According to reports, the money was transferred from the Central Bank to a company registered in the British Virgin Islands, which was allegedly controlled by Raja Salameh. Then the money was withdrawn to the brothers’ accounts in a Swiss bank; approximately $248 million went into Raja’s personal account.
France, Germany, Liechtenstein and Luxembourg have launched their own investigations. In March 2022, the authorities of several countries frozen assets in the amount of 120 million euros “in connection with the investigation of money laundering in Lebanon.” At the German Prosecutor’s Office OCCRP saidthat this is related to the Salame case.
In 2021 UK MP Margaret Hodge reported about Salam and his associates to the UK National Crime Agency when OCCRP identified his assets in the country.
In March 2022, Lebanese prosecutor Ghada Aoun accused Salame brothers in illegal enrichment and money laundering in connection with transactions with apartments in Paris. In June, Lebanese authorities searched Salameh’s Beirut property. Both brothers deny the allegations.
In the same month, Attorney Ghassan Weidat put forward against Salame, separate charges of money laundering, illicit enrichment, falsification of documents and tax evasion. But the case stalled due to possible political interference and lawyer’s objections Salame about the order of the hearings.
At the end of 2019, due to the financial crisis, Lebanese banks banned most depositors from withdrawing or transferring their dollar savings. At the same time, as can be seen from the bank leak, the son of the head of the Central Bank was able to send abroad more than 6.5 million dollars.
According to the leaked documents, the son of the chairman of the Central Bank of Lebanon managed to smuggle over $6.5 million abroad. However, for ordinary citizens, banks then limited access to deposits that depreciated due to the financial crisis.
At the end of 2019, most Lebanese bank customers were banned from withdrawing or transferring money in dollars as a foreign currency shortage hit the local financial system painfully. The savings of many savers were melting before our eyes: in just a few months, the real price of the Lebanese pound against the dollar fell by more than 80 percent. Prior to this, for more than twenty years, the pound was officially pegged to the US currency.
However, the Lebanese authorities did not formally impose restrictions on access to accounts, that is, a layer of people with the “necessary” connections could still manage their money.
As can be seen from the leaked documents that got to OCCRP, among these “chosen ones” was Nadi Salameh, the son of the permanent head of the Central Bank of Lebanon, Riad Salameh. For a long time, the economic policy of Riad Salameh was considered very successful, but now he is widely criticized, calling him one of the culprits of the financial collapse in Lebanon. […]
As can be seen from the leak, from October 1 to December 2, 2019, four tranches left the accounts of Nadia Salameh in the Lebanese AM Bank – each in the amount of one to two million dollars. Two local bankers familiar with processing payments at AM Bank confirmed the authenticity of the documents of the leak.
Bank statements show that the money was sent abroad, but without specifying the recipient country or bank. In one case, according to the documents, the payment went through the Bank of New York Mellon, but there is no data on the final addressee.
In addition, Salameh was able to convert billions of Lebanese pounds into dollars at the official rate, although the real exchange rate of the pound – on the black market – sank badly. On this Salame saved hundreds of thousands of dollars.
At the same time, most Lebanese stood in queues for many hours to withdraw at least a couple of hundred dollars from their accounts. The only alternative was to buy dollars on the black market at a completely different rate. Some depositors said their banks would only allow changing pounds to dollars if they agreed not to withdraw money for two years.
There have been many reports that members of the Lebanese political and financial elite were able to circumvent banking restrictions. In July 2020, Alain Bifani, a former senior official at the Lebanese Ministry of Finance, told the Financial Times that about six billion dollars had been “illegally taken out of the country”. At the same time, because of the “dirty money elite”, the burden of the crisis fell on ordinary citizens.
In 2020, analyzing the financial collapse in Lebanon, the American economist James Rickards wrote: “Elites, forewarned by insiders, withdrew huge amounts of dollars from Lebanon,” and the savings of ordinary entrepreneurs and bank customers were “frozen and virtually worthless.”
At the same time, some cases of withdrawal of capital are extremely difficult to document. Part of the reason is Lebanese bank secrecy laws, which have earned the country a reputation as “Middle Eastern Switzerland.”
According to Lebanese authorities’ assessments announced in September, the damage from the crisis to the local economy amounted to about $70 billion. Half of the approximately seven million people have fallen below the poverty line. The authorities can hardly provide the population with centralized services, such as electricity (which had been interrupted even before).
Sabine Kik, a professor of law at the Lebanese University, believes that “people who are not involved in anything” have been excommunicated from the banking system, where “criminal” orders reign.
According to Kik, the political and banking elite, having found their “gold mine”, “sent assets to offshore companies through financial schemes organized and controlled by criminal elements.”
Nadi Salame did not respond to questions about overseas money transfers.
On November 1, Salameh also sent thousands of dollars to a supplier of high-end Italian furniture, according to Salame’s bank statements.
All these payments were made by the Lebanese AM Bank, whose head and co-owner is ex-minister Marwan Kheyreddin. Khaireddin ran in the Lebanese parliamentary elections on 15 May. In 2020, at the height of the crisis in his country, he made a lot of noise in the media when he bought from an American actress Jennifer Lawrence penthouse in New York for ten million dollars.
Earlier, Khayreddin denied that he bought the penthouse for himself: according to him, he was simply the manager of the buying company. According to the registration records, Heireddin is listed in the purchase documents as a representative of the company.
AM Bank officially stated that everything was done in full compliance with Lebanese laws and best international practice. At the same time, they refused to comment on the details of Salameh’s operations.
Lebanese laws forbid the head of the Central Bank to engage in third-party business. He can only have securities or shares of joint-stock companies.
Ali Zbib, a Beirut-based lawyer and expert in international banking and financial regulation, told OCCRP that violating this ban is considered a conflict of interest and could result in removal from office.
There is no information in the public domain confirming the direct connection of Riad Salame with Crossland Assets. There is also no direct evidence that he broke the law. However, the data received by OCCRP raises serious questions, which the head of the Central Bank declined to answer.
Salameh was asked by OCCRP three times in four months if he had a stake in Crossland Assets. Each time he dismissed or ignored the question.
“We do not understand this issue,” he conveyed through a lawyer. Salame advised OCCRP to contact Crossbridge Capital, which, in turn, cited EU trade secret directives and declined to comment.
When asked again about Crossland Assets, Salame said: “Any private matter is non-negotiable.” Asked about Westlake, he replied, “We didn’t find anything of public interest in your email…Therefore, we have nothing more to say.”
Lebanese offshore king
In August, OCCRP and Daraj.com published material revealing that Riad Salame secretly owns nearly $100 million worth of offshore companies with overseas investments.
The investigation uncovered the presence of commercial real estate in the UK, Belgium and Germany. Some of the offshore companies were run by Riad’s son, Nadi, and his nephew.
The fact that Salameh has stakes in the businesses was not known until 2019, when Luxembourg changed its policy on the previously opaque corporate registry in line with EU standards for beneficial ownership disclosure.
In July, Salameh was charged in Lebanon with embezzlement of Central Bank assets and misappropriation of public funds, which served as the basis for freezing his assets. Hearings in the case are scheduled for January 2021.
Salameh has earned a dubious reputation in financially troubled Lebanon. On December 4th, he visited the ESA business school in Clemenceau – angry protesters blocked the doors, locking him inside.
“It is unacceptable for a thief from the political establishment to lecture at a university,” says lawyer Wassef Al-Kharake on videofilmed by local media.
“If you want to teach someone, go to your audience – to prison! — shouted another protester. “You don’t belong among people.”
According to local media reports, after that, the Prosecutor General of Mount Lebanon, Judge Gada Aoun, asked Salameh to come to her office on December 10 in connection with an investigation into alleged manipulations in the foreign exchange market.
A legal source told OCCRP that Salame sent a written apology through a BdL lawyer saying that he would not be able to comply due to security concerns. He asked to set up a new meeting, which will not be known to the media. According to the source, the judge granted his request.
Crossbridge Capital controls $4.5 billion in assets. The company’s shareholders included Kuwaiti businessman Abdulaziz Ghazi Fahad al-Nafisi; famous Lebanese stockbroker Nabil Aoun; Julius Baer Investment Limited, a subsidiary of a Swiss private bank; Pierre Fattoush, the late cement magnate accused by Lebanon in 2019 of tax evasion; the Lebanese construction magnate Ramzi Sanbar, and the owners of the Lebanese First National Bank, Roland El-Khraoui and Rami El-Nimer.
However, the name of the largest shareholder remains a mystery.
41.3 percent of the shares of Crossbridge Capital are owned by a company registered in the Island of Jersey, a British offshore jurisdiction. Dominion Employee Benefit Trustees Limited is managed by the private company Dominion. There is no information about its beneficial owner in the public domain.
T-Prime Limited owns nearly 1.6 percent of Crossbridge Capital. The company is registered in the BVI, and information about its owners is also not available. Neither the BVI, British Overseas Territory, nor Jersey, British Crown Land require beneficial ownership information.
According to the Tax Justice Network, the level of legal secrecy that Jersey provides “attracts illicit financial flows from around the world.” In 2019, the island committed to creating a public register of beneficial owners in line with EU standards — criticized for being slow to meet commitments.
Ben Cowdock, senior investigative officer at Transparency International UK, says the lack of transparency in company ownership encourages wrongdoing.
“Everyone knows that non-transparent companies are needed to hide the identity of the owners, and in some cases, a conflict of interest,” said Kaudok. “In order to prevent British companies from being used to cover up wrongdoing, non-transparent offshore structures that have shares in British firms should be required to disclose the identities of the true owners.”
Jim Henry, senior economics adviser and senior fellow at Columbia University’s Center for Sustainable Investment, wondered why a central banker would turn to non-transparent offshore companies to invest abroad.
“The very presence [у Саламе] offshore assets is not indicative of wrongdoing,” Henry told OCCRP. “Questions about the legitimacy of the deals and sources of income are raised by the fact that he covered it up.”