Luxembourg investigates Lebanon central bank governor for money laundering

Riad Salameh’s wealth is under scrutiny in several countries

Riad Salameh has been accused of embezzling money by Swiss authorities. Reuters

Luxembourg judicial authorities have appointed a judge to investigate Bank of Lebanon governor Riad Salameh for money laundering, a Luxembourg judicial spokeswoman said on Friday.

The appointment of an investigative judge comes two weeks after Luxembourg told the Organised Crime and Corruption Reporting Project (OCCRP) that it had opened a criminal case into Mr Salameh and his assets.

France, Switzerland, Liechtenstein and Lebanon are also investigating the sources of Mr Salameh’s substantial wealth.

Spokeswoman Diane Klein, who disclosed the investigation's focus on Mr Salameh to The National in an email, did not give further information because the investigation is active.

A central bank press attache said they had not been informed of the procedure.

Mr Salameh's finances have come under intense scrutiny since the collapse of Lebanon’s banking sector in 2019, which triggered the crash of the local currency and rapid inflation. Banks imposed illegal capital controls in November 2019 and banned transfers abroad.

Politicians are widely viewed as having mismanaged the country's finances since the end of the 1975-1990 civil war. Almost three quarters of Lebanon’s population currently lives in poverty.

European investigations may unveil financial crimes committed by Lebanese politicians who worked closely with the governor in the past three decades
Walid Sinno, Swiss Foundation Accountability Now

The OCCRP previously reported that a Luxembourg company beneficially owned by Mr Salameh — Fulwood Invest S.a.r.l — bought a $7.8 million property in West London in June 2020.

Six months later, the same company — under the management of his son, Nady — bought a $6.5m property in the London neighbourhood of Kings Cross.

Launched in January following a Swiss request for judicial co-operation, the Lebanese probe was partially suspended on November 3 after a Lebanese bank, BankMed, filed a lawsuit against the state to clarify in which circumstances banking secrecy can be lifted.

Lebanese investigating judge Jean Tannous had previously asked four banks including BankMed for access to accounts belonging to Mr Salameh’s brother, Raja. BankMed’s lawsuit accused him of gross misconduct.

Swiss investigators suspect the governor of having embezzled $330m from the central bank between 2002 and 2015 under the guise of payments to Forry Associates, a company registered in the British Virgin Islands and managed by his brother.

Investigating judges from Luxembourg, Germany, the UK and Switzerland met on October 14 at the headquarters in The Hague of Eurojust, the EU agency that deals with judicial co-operation among member states, in the presence of a French judge and Lebanon’s Mr Tannous, reported French newspaper Le Monde in early November.

Mr Salameh, who has headed Lebanon’s central bank since 1993, claimed last week that a local audit that he commissioned exonerates him of any wrongdoing. But experts told The National that the company was probably given only restricted access to the governor’s assets.

The central bank governor has repeatedly said his wealth comes from family inheritances and his previous salary at investment bank Merrill Lynch, which he said amounted to about $167,000 a month.

Walid Sinno, a member of Swiss Foundation Accountability Now, which filed a complaint in France against Mr Salameh in April, said that he hoped that “any future recovery of funds will benefit the Lebanese people".

“European investigations may unveil financial crimes committed by Lebanese politicians who worked closely with the governor in the past three decades,” he said.

Updated: November 26th 2021, 6:55 PM