Revealed: The 'laundering process' detected in Riad Salameh's Swiss accounts and property

The National gains access to European judicial files that trace money going from Banque du Liban to luxury properties in Europe

Lebanon's Central Bank Governor Riad Salameh gestures during an interview with AFP at his office in the capital Beirut. AFP

At least six European countries have opened an investigation into the embattled governor of Lebanon's central bank, Riad Salameh, since 2020, documents show.

Belgium, France, Germany, Luxembourg, Liechtenstein and Switzerland are trying to track the tangled path of money travelling from an account at the central bank to fund luxurious properties in Europe owned by Mr Salameh and his entourage.

Until now, information on how the money was allegedly channelled from Lebanon to Europe was scarce.

The National gained access to European judicial documents allowing us to lay out a picture of the financial flow.

European prosecutors are investigating transfers of more than $330 million allegedly embezzled from the Banque du Liban (BDL) through a contract awarded to Forry Associates, a company owned by the governor’s brother, Raja Salameh.

November 1, 2019: Banks implement capital controls after shutting for two weeks. Reuters

March 2020: Lebanon defaults on its sovereign debt for the first time in its history, amid protests in the country. AFP

April 2020: The government of Hassan Diab, prime minister at the time, pictured with President Michel Aoun, approves a financial recovery plan. Reuters

May 1, 2020: Mr Diab's government requests assistance from the International Monetary Fund. The Association of Banks in Lebanon rejects the plan. Reuters

May 20, 2020: the ABL presents an alternative plan. Reuters

July 1, 2020: a Parliamentary fact-finding committee backs the ABL. The IMF suspends negotiations with Lebanon. AP

August 10, 2020: Mr Diab resigns following a devastating explosion at Beirut’s port, in which at least 232 people died and 7,000 were injured. AP

September 10, 2021: Najib Mikati, fourth from right, forms a government. AFP

January 2022: Lebanon re-starts negotiations with the IMF. Reuters

April 7, 2022: The IMF and Lebanon reach a staff-level agreement. AFP

May 15, 2022: Lebanon holds parliamentary elections. EPA

May 20, 2022: Mr Mikati’s government approves a new financial recovery plan. Reuters

May 24, 2022: The ABL rejects the plan. The local currency hits the record low of 34,000 Lebanese pounds to the dollar – 95 per cent lower than the official rate. Reuters

Under a brokerage contract signed in 2002, financial institutions unwittingly paid commissions to Forry each time they bought or sold investment instruments from the BDL, including certificates of deposit, Eurobonds and Treasury bills.

According to European investigators, Forry, which is registered in the Virgin Islands, appears to be a shell company used to funnel misappropriated funds from Lebanon to Europe.

The commissions “do not correspond to any real service performed by Forry”, and “benefited Riad Salameh and his relatives without the knowledge of his employer, the Banque Du Liban”, French investigative judge Aude Buresi wrote in an attachment order seen by The National.

The money went through “successive stacking operations”, involving various people and countries, carried out to “obscure the origin of the funds”, characterising a “laundering process”, the attachment order said.

Suspicions are such that European investigators are to visit Lebanon on Monday to speak to witnesses and garner more information to boost their case against the brothers, who deny any wrongdoing. A spokesman for BDL did not respond to our request for comment.

Riad Salameh, who has not been convicted of any crimes, rejected the accusation of embezzlement, stressing that these commissions were not considered public money as they were paid by financial institutions transacting with the BDL and not by the bank itself.

Here is the alleged laundering scheme retraced by European prosecutors, going from Lebanon through banking institutions in Switzerland and Luxembourg to luxurious properties in Europe.

Following the money

The money was allegedly initially transferred from an account at the bank in Lebanon, where the commissions were paid into Forry’s account in Switzerland owned by Raja Salameh.

From there, it is said the money followed a complex path through bank accounts in several countries including Lebanon, Switzerland, Luxembourg and Cyprus, leading ultimately to Raja or Riad Salameh and his Luxembourg investment vehicles.

Raja Salameh is Forry’s main beneficiary: his personal account in Switzerland received more than $204 million between 2002 and 2016, the French attachment order said.

Another principal recipient was allegedly Riad Salameh and several of his offshore structures, which received about $26.2 million, €9.2 million and 5.3 million Swiss francs. The money was transferred directly from Forry’s account or indirectly from Raja’s personal account in Switzerland.

Other significant beneficiaries include Anna Kosakova, a partner of Riad Salameh's indicted for financial crimes in July in the case by the French judge.

Her company, First Overseas Relation for Realty and Investment Ltd, or Forri, received $1.3 million and €183,000 directly from Forry “without economic justification”, the French judge wrote.

'Significant property assets'

The bulk of the commissions, more than $220 million according to the French attachment order, was transferred from Forry to Raja Salameh’s account in Switzerland, then to his accounts in Lebanon.

Once in Lebanon, the funds became difficult to trace as European investigators could not access data due to banking secrecy laws, which could only be lifted by the Special Investigation Commission (SIC), chaired by Riad Salameh himself.

“It seems difficult, even impossible, to obtain the account information of Riad and Raja Salameh from Lebanese banks,” the French judge wrote in the document.

After much resistance, the Lebanese judiciary received Raja Salameh's banking information in May, after the SIC agreed to hand it over, but they have yet to share the results with the foreign judicial officials, a source revealed.

European investigators were nonetheless able to retrace part of the financial flow from Lebanon to properties in Europe, based on banking information provided by the Luxembourg judiciary.

While Raja Salameh was transferring Forry’s commissions to his Lebanese accounts, “Riad Salameh was concomitantly transferring [funds] … from his Lebanese accounts to Luxembourg personal and corporate accounts of which he is or has been the beneficial owner”, the French attachment order stated.

From there, the funds were transferred to several property investment companies based in various European countries and used to acquire luxury properties in France, Belgium, the UK and Germany.

“During the period of operation of the Forry contract, Riad Salameh built up significant property assets, notably in France, the United Kingdom, Belgium and Germany, financed via the structures of which he is, or was, the actual beneficiary," the order said.

The coincidence in the timing and amount of funds transferred in and out of Lebanon led European investigators to suspect that the money was being channelled from Raja Salameh’s accounts in Lebanon back to Europe via banking institutions in Luxembourg.

Despite the bulk of the Forry funds being routed through Lebanon, where further tracing is difficult due to banking secrecy and unco-operative local authorities, European investigators were able to identify some fund transfers from Forry accounts directly into Riad Salameh’s Luxembourg vehicles and property companies without first going through Lebanon.

Most of these properties and accounts are now frozen, as part of a joint investigation led by the French, German and Luxembourg judicial authorities to seize €120 million of assets belonging to Riad Salameh and members of his family.

The visit by a delegation of French, German and Luxembourg judicial officials to Lebanon on Monday is part of this joint effort — an unprecedented move to collect more information on the case and hear from witnesses.