Luxembourg-raided companies allegedly used by Riad Salameh to funnel $100m out of Lebanon

Exclusive documents show companies suspected of channelling funds embezzled from Lebanon central bank - with little due diligence from European banks

Riad Salameh's business dealings were investigated by police in Luxembourg. Nick Donaldson/ Reuters
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Three Luxembourg-based companies allegedly used by Riad Salameh to funnel about $100 million out of Lebanon have been raided by a police anti-money laundering unit, it can be revealed.

According to judicial documents obtained by The National, these Luxembourg-based structures are suspected of having channelled embezzled public funds across Europe, making Luxembourg a pivotal hub in Lebanon's central bank embezzlement scandal.

Most of the funds received by the companies were used to acquire various properties in Europe, including Germany, Belgium, France and the UK, according to a Luxembourg financial watchdog report reviewed by The National.

The disclosures add a new dimension to the saga of Lebanon's central bank governor, who is suspected of embezzling $330 million from his financially stricken nation. He is under investigation in five European countries, including France and Germany – both of which issued international arrest warrants resulting in an Interpol red notice in May – as well as Switzerland, Belgium and Lichtenstein.

The Luxembourg police anti-money laundering unit raided the three companies, BR 209 Invest SA, Stockwell Investissement SA and Fulwood Invest, along with the residence of a Belgian citizen named Gabriel Jean, a former director of Stockwell, and Comptaxiome, an accounting firm, on March 2 last year.

This massive operation, related to the continuing probes into money laundering opened in several European countries against Mr Salameh and his brother Raja, kicked off at 6.34am at the home of Mr Jean and the offices of Comptaxiome according to the search report seen by The National.

The Salameh Papers - The National uncovers details on allegations against Lebanon banking chief

The Salameh Papers - The National uncovers details on allegations against Lebanon banking chief

For several hours, the Luxembourg police, joined by investigators from France and Germany, searched meticulously for evidence, copying documents to trace an alleged money laundering scheme from an account at the central bank to Mr Salameh's massive real estate holdings in Europe.

The suspected scheme included another Salameh-affiliated vehicle, BET SA, which was not searched that day because it was relocated to France in 2021.

These Luxembourg companies received a minimum total of €77.6 million, £2.5 million, and $8.7 million from “Mr Salameh's foreign accounts and the ones of his offshore companies”, according to a 2021 report by the Luxembourg Financial Intelligence Unit (CRF) watchdog reviewed by The National – a money shuffle that could rival Switzerland's notorious reputation for accommodating suspicious funds.

The report said most of the funds received by the companies were used to acquire properties in Europe.

Comptaxiome's director, Catherine De Waele, who was responsible for the administration of Stockwell and BET, told the police she was “surprised” they had taken action “only now”. She added that she had filed a suspicious operation report to the CRF in February 2021 regarding both companies.

Mr Jean, her husband, was the director of Stockwell and BET. Amid mounting judicial and media pressure, he resigned as the director in 2021.

Ms De Waele and Mr Jean could not be reached for comment.

Both the governor and his brother did not respond to a request for comment from The National.

They have consistently maintained their innocence, with Mr Salameh previously denouncing what he described as an attempt to scapegoat him for Lebanon's financial meltdown.

'Incomplete banking documentation'

But Ms De Waele has previously shown a more lenient attitude towards his dealings.

In 2020, following contacts from investigative media outlets OCCRP and Daraj, which were looking into the extent of Riad Salameh's offshore activities, Ms De Waele mentioned in an email to him a phone call from the journalists.

She stressed how important it was “not to overlook this kind of 'investigations' that can lead to detrimental articles”, as well as not “letting these journalists making up stories”.

While the two media outlets mapped out most of Riad Salameh's offshore companies in their investigation, the sources of funding – and whether they were illicit – remained at that time uncertain and no judicial proceedings were publicised.

The tide has turned with the opening of investigations into the Salameh clan in at least six European countries since then.

In Luxembourg, the probe was entrusted in 2021 to Martine Kraus, an investigating judge at the District Court of Luxembourg.

As part of the probe, the CRF completed a comprehensive investigation into Mr Salameh's banking transactions, which uncovered several alarming findings.

These included “incomplete banking documentation and, partially, inconsistent and contradictory information” as well as “the existence of complex corporate structures and transactional mechanisms established by Riad Salameh and his associates”, for which the investigators could not provide an economic rationale if the flows were indeed legitimate.

Throughout their investigation, European judicial authorities managed to bridge the gaps and trace a significant portion of these flows to Forry Associates Ltd through a complex web of layering operations involving different countries and individuals.

Forry is the alleged money laundering vehicle owned by Raja Salameh, the governor's brother, which charged banks a 0.38 per cent commission from each transaction with the central bank between 2002 and 2016 without their knowledge.

The evidence was compelling enough for Luxembourg to freeze nearly €11 million across multiple company accounts belonging to Riad Salameh and members of his inner circle as part of anti-money laundering action led by Eurojust.

'Why go through so many intermediaries?'

Stockwell Investissement, BR 209, Fulwood and BET were all owned by Mr Salameh until the governor made a donation of a portion of his wealth to his romantic partner Anna Kosakova and their daughter.

Since 2015 he has held 100 per cent of the 'usufruct' shares in Stockwell – usufruct meaning the right to enjoy and derive benefits from the property – while Ms Kosakova and their daughter share the bare ownership.

That year he also transferred BET's shares to Ms Kosakova.

These companies hold multimillion-dollar real-estate properties in Europe, either directly or indirectly through their shares in other entities, according to the CRF.

The tangible assets of Stockwell amount to €9.4 million, and include various real-estate holdings in Munich.

BR 209, which fully owns Fulwood, has financial assets totalling approximately €58 million. BR 209 directly and indirectly owns properties in Belgium, Germany and the UK.

BET's financial assets amount to €21.6 million, and it indirectly owns several real-estate assets in Paris.

BET has funded SCI ZEL, a French real-estate investment company run by Ms Kosakova, to buy properties in Paris for more than €14 million.

“Why go through so many intermediaries if not to conceal the origin of funds or the true owner?” the French police asked Ms Kosakova during her hearing.

She was placed under formal investigation in July, 2022, for alleged organised money laundering.

What is the economic reason, the police wondered, to “purchase properties in France through a Luxembourg company with no economic activity, which then lends money to a French real estate company, SCI ZEL, when Riad has a bank account in France”?

Ms Kosakova did not respond to The National's request for comment.

Salameh's mysterious windfall

The BDL embezzlement case highlights European banks' due diligence gap.

Riad Salameh has repeatedly claimed to the press and the judiciary that his wealth came from inheritances and his income earned before he became governor.

The Luxembourg financial watchdog said in its report that experts were unable to identify the origin of his wealth, while stressing Luxembourg banks' lack of scrutiny regarding the transactions associated with his accounts held within the country.

While they could not trace his wealth, investigators said that they found “interesting” the “coincidence” between the “exponential increase in his wealth” and the contract between Forry and Lebanon's central bank.

In 2007, upon initiating his relationship with HSBC, Riad Salameh disclosed receiving a salary of $250,000 and claimed his wealth was estimated between $20 million and $25 million, as stated in the banking documents seen by The National.

He also said that his fortune came from his professional activities, without specifying which, and give no information regarding any inheritance, “even though the bank explicitly asked for clarification”, the report stressed.

Likewise, when he was entering into a relationship with BGL BNP Paribas in 2008, “it seems that little inquiry was made into the origin of Riad Salameh's wealth”, according to the CRF.

In 2015, BGL BNP Paribas nonetheless undertook a review of its business relationship with Riad Salameh.

But it proved to be extremely limited in scope.

The memorandum, seen by The National, stressed the “skills of their client” and “his political neutrality” and praised him for “implementing a monetary policy that has preserved the monetary stability and Lebanese banking sector until today”.

There is “no concern about his integrity and the origin of his wealth, which was first acquired during his private sector career and then boosted by the stellar performance of local government bonds and real estate”, said the chief executive of BNP Paribas Wealth Management Middle East in a 2012 note quoted in the memorandum.

Against this backdrop, “delving into the client's wealth origin in detail six years after the start of our relationship … seems rather clumsy considering the client's level of renown and integrity”.

The bank requested only a few actions, such as establishing with the client the mapping of his structures, and no longer accepting transfers of funds outside of this scope.

“Any other approach seems unnecessary and even inappropriate in this case”, the bankers concluded.

BGL BNP Paribas did not respond to a request for comment from The National.

French judge Buresi wrote that “in light of the complexity of money laundering schemes, the verification of the Luxembourgish BNP appears inefficient”.

Updated: July 29, 2023, 4:45 AM