The five European countries investigating Lebanon's bank chief Riad Salameh — and why

For almost 30 years, Lebanon's central bank governor Riad Salameh was widely lauded as the guardian of the financial sector, the country's only source of hard currency — and a source of national pride. That changed in late 2019, when the Lebanese economy began showing signs of collapse after decades of corruption and the squandering of public funds. Many blame the country's entrenched elite, including Mr Salameh, for the economic disaster that followed. He now faces demands for accountability over alleged wrongdoing, as well as investigations by several European nations into his personal finances. The Swiss Attorney General’s office opened the first criminal inquiry into Mr Salameh's dealings in October 2020, with courts all over Europe launching investigations soon after, including France, Liechtenstein, Luxembourg and Germany. These probes are investigating Mr Salameh for the alleged money laundering of more than $330 million from the central Banque du Liban (BDL) and €5 million through contracts awarded to his entourage. Prosecutors are trying to determine if profits from the alleged embezzlement of public funds were channelled to Europe, where the governor has large investments, especially in property. If found guilty, Mr Salameh could serve up to five years in prison and the confiscation of his assets in Europe. He has repeatedly denied any wrongdoing. He claims his wealth, which he estimates at $23 million, has been lawfully acquired and comes from investments he made while working at Merrill Lynch as a banker, before becoming the BDL governor in 1993. Given the complexity of the case, which involves a multilayered set-up of companies and transactions across various countries, European courts have set up an international investigative team to exchange information. Prosecutors are not allowed to comment on continuing cases but some information about the investigations has been leaked to the media. Here is what is known: Most information on the Swiss investigation comes from a leaked request for mutual legal assistance that Switzerland sent to Lebanon in January last year. According to the document, Switzerland's Attorney General suspects Mr Salameh of embezzling about $330 million in public funds through Forry Associates, a company registered in the Virgin Islands owned by his brother Raja Salameh. Under a brokerage contract signed in 2002, commercial banks paid commissions to Forry when they bought certificates of deposit — an investment instrument offered to banks — from the BDL. While it is not unusual for central banks to use intermediaries to sell their financial products, the opacity of this contract has raised suspicions among Lebanese financiers. Lebanese banks and BDL’s Central Council — which includes the governor, our vice governors and the directors general of the economy and finance ministries — all said that they had never heard of Forry. Reuters said banks did not know they were paying commissions to a company owned by Mr Salameh’s brother, as the ultimate recipient of the commissions was not mentioned in the contracts between the central and commercial banks. Mr Salameh had said at the time that Forry's only job was to gather commissions and fees and redistribute them “according to instructions". Swiss prosecutors found that most of the commissions was transferred to Raja Salameh’s account in Switzerland, then some of it transferred to his accounts in five Lebanese banks. The rest was transferred to three other companies that Mr Salameh is suspected of owning: Westlake Commercial, SI2SA and Red Street 10. In June last year, France’s National Financial Prosecutor’s Office (PNF) opened a preliminary investigation into Mr Salameh’s fortune, after two complaints by anti-corruption organisations. A month later, French anti-corruption judge Aude Buresi took over the case . On July 14, she indicted Anna Kosakova , 46, a former partner of Mr Salameh with whom he has a daughter, according to a birth certificate seen by The National. French investigators suspect her of criminal conspiracy, organised money laundering and aggravated tax fraud laundering as they found elements connecting her with Raja's company, Forry. The French investigative journal Mediapart revealed that Ms Kosakova is one of the beneficiaries of Raja Salameh's company, through a different, similarly named company called Forri, which stands for First Overseas Relation for Realty and Investment Ltd, a group she created in Cyprus in 2004, according to the country's trade register. The investigators, as Mediapart reported, managed to retrace an alleged money-laundering network. They unveiled an elaborate scheme involving public funds siphoned via Forry and funnelled to France though vast property investments. One of the companies Mr Salameh allegedly used to channel the money is SCI ZEL. The property investment company initially managed by Raja Salameh, then by Ms Kosakova after 2015, has acquired at least €14.3 million ($15 million) worth of property in France, according to deeds of sale seen by The National. This includes two apartments in Paris’s 16th arrondissement on Avenue Georges-Mandel, where Ms Kosakova and Mr Salameh lived, and offices on the upmarket Champs-Elysees for €8.7 million. These offices form a second part of the French probe. SCI ZEL rented them to another company owned by Ms Kosakova, Eciffice Business Centre, with which the BDL had signed a lease contract in September 2010. The Parisian offices were used as a “recovery centre”, which provides a back-up server for BDL’s data to preserve continuity in case of failure in the Beirut main office. The BDL has paid almost €5 million to Eciffice since 2011 in rent as part of contracts that Ms Kosakova and Mr Salameh co-signed and renewed several times. As the Champs-Elysees offices are not registered with the French authorities, BDL does not have to justify any formal purposes for the lease. The investigators looked into the specific services provided by Eciffice, as well as the choice of the location, on one of the most expensive avenues in the world. SCI ZEL is 99 per cent owned by BET, an asset management company established in Luxembourg in 2007, whose sole shareholder is Ms Kosakova. In 2020, she transferred the bare ownership to her daughter while keeping the right of usufruct, which is the right to benefit from the company. It means BDL rent money was transferred to a company owned mostly by Mr Salameh's daughter. The French judiciary suspected that the contracts may have been part of another scheme to funnel millions of euros in public funds, leading police to raid the office premises in October last year to gain access to the company's accounts. Liechtenstein’s Prosecutor General said in November last year that the country had launched a “money-laundering investigation” into Mr Salameh. Most of what we know comes from a leaked request for judicial assistance that Liechtenstein sent in June to the Lebanese judiciary. According to the document sent by the Liechtenstein Court of First Instance, the investigation is specifically looking into two Liechtenstein-based companies — Crossland Ltd and its sole shareholder, a trust company called Salamandur Trust — on suspicion of money laundering. The companies’ ownership is unknown, as trusts in Liechtenstein are not required to disclose public information about their shareholders. But a report in 2020 by the Organised Crime and Corruption Reporting Project (OCCRP) and Daraj, an Arabic media platform, claimed the companies were linked to Mr Salameh. The report revealed that Crossland, registered in Panama as Crossland Assets before moving to Liechtenstein in 2018, bought stakes in Crossbridge capital, a London wealth management firm where the governor’s son, Nady Salameh, used to work. Under Lebanese law, the BDL governor should not engage in any type of activity in a company or any other professional work, whether remunerated or not. After the purchase, Crossbridge Capital then transferred the shares to a subsidiary of Bank Audi, a major Lebanese bank, in 2016. The alleged transaction between a company tied to the governor and a bank he regulates raised the issue of a conflict of interest, which the involved parties denied. What is known about investigations in Luxembourg and Germany comes from Liechtenstein's request for judicial assistance to Lebanon. According to the letter, the judicial authorities in the two countries started their inquiries after Switzerland began investigating Forry over suspicions that the company “transferred and laundered money through real estate investment” carried out by companies based in Luxembourg and Germany. The investigators are looking into three Luxembourg-based companies controlled by Mr Salameh — BR 209 Invest, Fulwood Invest Sarl and Stockwell Investissement — which have invested in properties worth at least $50 million in Germany and the UK, according to a 2020 OCCRP investigation. In March, the EU's Hague-based criminal justice agency froze €120 million ($124.3 million) of assets belonging to Riad Salameh and members of his family. The precautionary measure includes five properties in Germany and France, and bank accounts linked to continuing investigations of money laundering. This could be an important step for Lebanon to recover assets, should the investigation reveal them as ill-gotten.

The five European countries investigating Lebanon's bank chief Riad Salameh — and why

Banque du Liban governor's personal wealth has come under intense scrutiny over past two years