Why is Lebanon's Central Bank Governor Riad Salameh under investigation?

At least six countries are investigating the millionaire

There are two active investigations into Lebanon's Central Bank Governor Riad Salameh. AFP

Lebanon’s veteran central bank governor, Riad Salameh is under investigation in his homeland and at least five European countries, mainly on suspicion of money laundering.

The investigations come at a highly sensitive time for Lebanon. Its leaders, including Mr Salameh, 71, are negotiating a bail-out from the IMF to help the country to recover from the collapse of its banking system in 2019. This triggered the sharp devaluation of the Lebanese pound, which resulted in an increase in poverty and social unrest.

Lebanon has a long culture of impunity borne from its sectarian power-sharing system. The judiciary rarely questions or jails top officials. Politicians accused of corruption have a habit of rallying public opinion behind them by claiming that their entire sectarian group is under threat. Activists say that this is an attempt to scare the Lebanese public, still scarred from the 1975-1990 civil war. Top civil servants are also appointed along sectarian lines. The central bank governor is always a Maronite Christian.

But this culture of impunity is slowly changing. Politicians and officials such as Mr Salameh have come under intense scrutiny since the country’s financial collapse. Protesters openly insulted them during nation-wide demonstrations that shook the country in late 2019. This was a first.

Mr Salameh has repeatedly denied accusations and says he is the victim of a media campaign against him outside Lebanon. He claims that an audit he commissioned from a Lebanese auditor exonerates him, but he has refused to hand its content over to the media.

Here is a breakdown of the known investigations into Mr Salameh’s wealth.

What is Ghada Aoun’s investigation?

Lebanese judge Ghada Aoun.

There are two active investigations into Mr Salameh in Lebanon.

A civil society group called The People Want to Reform the System filed a lawsuit against Mr Salameh in 2020 in front of Beirut judge Lara Abdel Samad, one of its members, lawyer Haitham Ezzo told The National. The group accused the central bank governor of misappropriation of public funds, gross misconduct and undermining the state’s financial stability, said Mr Ezzo.

But this lawsuit has stalled. Mr Salameh was supposed to be interrogated in October but he appealed and Beirut’s court of appeal has yet to respond. Legal procedures are delayed in Lebanon by strikes led by judges, court clerks and lawyers caused by the country’s economic collapse.

The same group filed a second lawsuit against Mr Salameh in December in front of another judge, Ghada Aoun. Mr Ezzo said the group accused the governor of illegal enrichment, money laundering, and forgery of official documents.

Ms Aoun openly supports President Michel Aoun, who has publicly criticised Mr Salameh. They are distant relatives.

Ms Aoun has aggressively pursued the central bank governor. On January 11, she issued a travel ban against him. On January 18, she froze his assets, including his property and cars.

Mr Salameh ignored her three hearing requests and publicly accused her of political bias. Last week, she sent one of the country’s security agencies, State Security, to bring him for interrogation at two of his homes and at his office in Beirut. He was reportedly nowhere to be found. The next day, he attended a meeting at the central bank, sources told The National.

Ms Aoun has charged the head of one of Lebanon’s larger security agencies, the Internal Security Forces, with obstructing her attempt to apprehend Mr Salameh. Maj Gen Imad Othman denies this but their public spat is viewed as an extension of the political struggle between the country’s leaders who support Mr Salameh, including Prime Minister Najib Mikati, and those, like the President, who believe he should be behind bars.

Who is Jean Tannous and what is happening with his investigation?

The second Lebanese investigation into Riad Salameh’s wealth has received support from European countries conducting similar probes.

It is led by judge Jean Tannous, who is widely viewed as apolitical. He is investigating Mr Salameh over embezzlement, money laundering, forgery and the use of forged documents.

Mr Tannous launched his investigation in March 2021, five months after a Swiss request for judicial co-operation. The National reported last November that judges in Switzerland suspect that Mr Salameh embezzled $330 million from the central bank between 2002 and 2015 under the guise of commissions on commercial banks’ purchases of government certificates of deposits.

These commissions allegedly went to Forry Associates Ltd, a company registered in the British Virgin Islands and managed by his brother, Raja Salameh, and then onwards to Switzerland.

Mr Salameh denies these accusations. Reuters published a report this week that showed Lebanese commercial banks were not aware that the commissions went to Forry. Contracts show that commissions were to be paid to the central bank.

Mr Tannous has faced repeated obstacles during his investigation. They hint at the strong support from which Mr Salameh benefits in Lebanon. Public prosecutor Ghassan Oueidate recently barred him at the last minute from raiding five Lebanese banks with accounts belonging to Raja Salameh. This came after a call from Mr Mikati, who reportedly threatened to resign.

Mr Tannous could not take part in the second meeting dedicated to European investigations into Mr Salameh organised by Eurojust, an agency of the EU that helps member states with judicial co-operation. He was invited to attend the first meeting in The Hague last October and again last month, but Eurojust cancelled his participation after Mr Oueidate asked that a second judge accompany him just days before the event.

Are European countries investigating Mr Salemeh?

At least five European countries are investigating Mr Salameh’s assets. Germany, Luxembourg, France, Liechtenstein and Switzerland suspect him of money laundering and, with the exception of Liechtenstein, have requested judicial co-operation from Lebanon.

A Swiss Foundation, Accountability Now, which filed complaints in Switzerland, France and the UK against Mr Salameh and his entourage, told The National it had found evidence of corruption and embezzlement of public funds which were used, among other things, to buy property across Europe.