Why EU investigators are questioning Al Mawarid chief in Salameh corruption inquiry

Judicial files seen by The National show Marwan Kheireddine has been quizzed over suspicious transactions as part of Lebanese investigation

A branch of the central bank in Hamra, Lebanon, as the investigation into its governor rumbles on. Reuters

A delegation of European judicial officials is moving forward with its investigation into an alleged $330 million corruption case against Lebanon's central bank governor Riad Salameh.

Witnesses include Marwan Kheireddine, chief executive of Lebanese Al Mawarid Bank, who was questioned on Tuesday in Beirut for several hours, AFP reported, citing an anonymous official source.

Jean Tannous, the judge appointed in 2021 to lead the Lebanese investigation into alleged financial misconduct by Riad Salameh, last year questioned Mr Kheireddine over vast cash withdrawals made from the governor's brother's account at Al Mawarid, according to judicial documents seen by The National.

Mr Kheireddine is a former state minister, also known for his close ties with Riad Salameh. He ran for parliament in elections last year but lost to independent candidate Firas Hamdan. He could not be reached immediately for comment.

AFP reported bankers were questioned about the Lebanese bank accounts of the governor's brother, Raja Salameh, as well as money transferred abroad to Riad Salameh.

Six European countries have opened investigations since 2020 into the Banque du Liban (BDL) governor over the alleged embezzlement of more than $330 million through a brokerage contract awarded to his brother's company, Forry Associates, in 2002.

Banks were unwittingly paying commissions to Forry each time they bought Banque du Liban's financial products — certificates of deposit, Eurobonds and Treasury bills.

European investigators tracked an alleged money-laundering scheme, from a BDL account which paid the commissions to fund luxurious properties in Europe for Riad Salameh and his entourage, judicial documents seen by The National reveal.

Both brothers deny any wrongdoing.

Riad Salameh, who has not been convicted of any crimes, rejects the accusation of embezzlement, stressing that the commissions in question were not deemed public funds.

Is Al Mawarid involved?

According to documents from the Lebanese judicial file, which was shared with the EU investigation, Al Mawarid is suspected to have played a role in the alleged laundering scheme.

It is reported that Raja Salameh has three accounts at Al Mawarid, which yielded a "very high return on investments", wrote Mr Tannous, "so that $15 million initially invested became $150 million", between 1993 and the closure of the account in September 2019.

This was only a month before the country entered a steep liquidity crisis, which led Lebanese banks to impose draconian limits on withdrawals and transfers abroad outside any legal framework.

The Lebanese prosecutor's attention was drawn to vast cash withdrawals, including "an amount of 1 billion Lebanese pounds ... once withdrawn in cash" (around $666,666 before the 2019 crisis), which were then deposited "by cheques and bank transfers to Riad Salameh's account at the Banque du Liban", the judge added, citing Riad Salameh's own statement during one of his hearings with Mr Tannous.

These cash withdrawals "are either irregular or conceal money laundering", the judge wrote.

Mr Kheireddine said in last year's hearing with the Lebanese judge that he was unaware the money in Raja Salameh's account belonged to the governor, according to the minutes of the questioning seen by The National.

"The money was delivered to Raja Salameh in boxes" when withdrawn in Lebanese pounds — "it was delivered in a bag or an envelope if the amount was small", when withdrawn in dollars, he said.

He did not ask the reason behind these withdrawals because "a lot of people used to do the same thing", he claimed.

Key banking information

Visiting European investigators have also questioned other witnesses, including former BDL vice governors and other managers.

An informed source says they are on Wednesday to question Raed Charafeddine, BDL vice governor from 2009 to 2019.

This week they examined Raja Salameh's Lebanese bank records, Reuters reported. Two sources familiar with the matter confirmed the information to The National.

Raja Salameh has accounts at several Lebanese banks — not only Al Mawarid — into which the bulk of Forry's commissions were transferred.

Due to banking secrecy laws and unco-operative authorities, European investigators were able to only partially track the money once it was transferred to Lebanon as they could not access the relevant data.

Raja Salameh's account information might reveal the identity of alleged accomplices who benefited from these transfers in Lebanon and help track the money flow in its entirety.

Updated: January 18, 2023, 7:13 PM