German judicial documents obtained by The National shed light on the involvement of new people in the acquisition of multimillion-dollar real estate owned by Lebanon's central bank governor Riad Salameh in Germany, which is currently under investigation by European authorities.
They also reveal direct transactions from Forry Associates Ltd to fund these properties.
At least six investigations have been opened in Europe where the governor and his family own a multimillion euro real estate empire, which European judiciaries suspect was acquired with misappropriated funds.
The German investigation into the once-praised central bank governor started after Lebanon's top prosecutor requested in May 2021 an inquiry into the assets held in Germany by Riad Salameh, his brother, and his former assistant, Marianne Hoayek, to freeze these assets as a precautionary measure.
The probe was entrusted to the head of the Munich I public prosecutor's office, Hans Kornprobst.
Ms Hoayek was placed under formal investigation in Paris in June for criminal conspiracy as part of the ongoing French investigation.
In 2022, Germany joined forces with France and Luxembourg as part of an international investigative team, to enhance information sharing.
The German investigation took a significant turn in May with the issuing of an arrest warrant and an Interpol notice.
The judicial documents provide an exclusive insight into the German component of the embezzlement scandal – of which little was known until now.
Laundering money into the 'legal economic circuit in Germany'
The new names are Nady Salameh, the governor's son, Marwan Issa El Khoury, his nephew, and Gabriel Jean, a Belgian citizen.
The three are alleged to have “invested funds from Lebanon’s central bank” in real estate and in share acquisition “while concealing the origin of the incriminated funds within the legal economic circuit in Germany”, wrote a judge at the Munich Court in a March 2022 seizure order.
They are identified in the probe as among the directors of Luxembourg-based entities used by Riad Salameh to purchase high-end properties in Hamburg, Dusseldorf and Munich.
These purchases were made with alleged misappropriated funds from the Lebanese central bank, according to the German documents.
It is the first time that the roles of these three individuals and their liability as directors of the companies have been explicitly stated.
Mr Jean was director of Stockwell Investissement SA, while Nady Salameh and Mr Khoury were directors of BR 209 Invest SA during the period under investigation.
Both companies are based in Luxembourg and are owned by Riad Salameh.
The three people “stated that they had given their consent to the defendant Riad Salameh to allocate the incriminated funds to the legal economic circuit in Germany”, the judge added in the document.
These suspicions led the Luxembourg police to conduct large-scale raids on three Luxembourg-based companies suspected of hosting a minimum of $100 million of misappropriated funds linked to property investments by the Salameh family, including in Germany.
They found no obvious sign of Stockwell and BR 209's operational endeavours.
“Entities that lack genuine operational activity often raise suspicions as potential facades for money laundering, serving as additional layers to obscure the origin of funds,” a lawyer specialising in combating money laundering told The National. “While it may not always be the case, this situation can be a red flag.”
The offices of Stockwell Investissement were found to be completely unoccupied when raided by the police, while BR 209 has been subleasing offices since 2021 from another company that seems unaware of its tenant's activities.
This subletting arrangement was facilitated by the Luxembourg bank BLG BNP Paribas, which has a business relationship with Riad Salameh.
Amid mounting legal pressure, Mr Jean left the management of Stockwell in 2021.
He was replaced by three employees from Lebanese bank Al Mawarid.
Mr Jean was also the director of another company, BET SA, related to real-estate purchases in France for Riad Salameh's romantic partner, Anna Kosakova, and their daughter.
Riad Salameh, his brother Raja did not response to our request for comments.
The National approached his son, Nady, to answer a number of questions concerning the investigation. However, he did not provide a reply to these questions.
The National could not reach Mr Jean for comment.
The Salameh brothers have previously denied any wrongdoing, stating that no public funds were ever transferred to their private accounts. The governor previously denounced what he described as an attempt to scapegoat him for Lebanon's financial meltdown.
Mr Issa Khoury told the National in a letter that he has not "been approached in any manner whatsoever by the German judiciary". He added that as a lawyer "it is not unusual (...) to be requested to sit on a board of directors, especially when this is consistent with his background". His full response is here.
The speditionsstrasse 13 located in the Docks district of Düsseldorf was bought in 2012 for €4.6 million. Photo: Google Street View
A direct transfer from Forry
European investigators suspect that the funds in question were initially embezzled in Lebanon through Forry, suspected to be a shell company that served as a laundering vehicle to siphon off more than $330 million of public money.
It was done through a 0.38 per cent commission taken by the company from commercial banks on the sale of financial instruments such as Eurobonds, Lebanese Treasury bills and certificates of deposit from the central bank, without actually providing any services in return.
The commissions were then transferred to Europe, where Riad Salameh and his relatives bought extensive properties.
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”, a French attachment order obtained by The National said.
Most of the commissions – more than $220 million – were transferred from Forry to
Salameh's Swiss account before being routed to his accounts in Lebanon.
Once in Lebanon, the funds became hard to track, as European investigators faced obstacles in gaining access to data due to Lebanese banking secrecy laws.
But this did not prevent them from piecing it together.
They noticed that while Raja Salameh was transferring Forry's commissions from Switzerland to his Lebanese accounts, the governor was simultaneously transferring money from his Lebanese accounts to personal and corporate accounts in Luxembourg.
Based on a financial analysis, the German judiciary found out that the majority of the funds used to finance the German acquisitions by Stockwell and BR 209 came from Riad Salameh's account at the central bank, either directly or indirectly through his personal and corporate accounts in Luxembourg.
But in contrast to the typically layered money flows uncovered in other European countries, the German documents show surprisingly straightforward operations by Forry for the acquisition of luxury properties in Germany.
In 2012, BR Invest 209 received a direct transfer to its BGL BNP Paris account of €2.8 million from Forry's HSBC account in Switzerland, which was used to buy the high-end building in Dusseldorf.
“This transaction raises a lot of questions”, the Luxembourg watchdog wrote in a report seen by The National to the judiciary as it was investigating the money flows related to the Salameh clan.
“It looks like a mistake”, a lawyer specialising in combating money laundering confirmed to The National.
This transfer could have been a giveaway for the judiciary, he added.
“It was likely driven by an urgent need for money to cover the asset payment. This may have triggered alarms on the German side. While transferring funds from Mr Salameh's personal account maintained appearances, the origin of the funds becomes obvious in this case”, he said.
'Joint money laundering in four instances'
German investigators suspect that the Forry commissions were used to partially buy four properties for more than €18 million between 2012 and 2017 through BR 209 and Stockwell.
In Munich, Stockwell bought high-end commercial properties and four parking spaces in central Munich in 2015 for €6.4 million, while also securing a property for €3.4 million in the posh area of Gartnerplatz in 2017.
BR 209 provided financing for the acquisition of a 94 per cent stake in 2016 in the German company WBH 51 GmbH, valued at €3.9 million, which owned an office building in Hamburg.
BR 209 also obtained 94 per cent of shares in Dock 13-Villa GmbH, a German company that owns a high-end property in the Docks district of Dusserdorf, for €4.6 million in 2012.
The remaining shares of the two German companies were acquired either by Mr El Khoury himself or were split between him and Nady Salameh, the seizure order claims.
Riad Salameh's real estate in Germany had already been mostly mapped by a 2020 investigation from media outlets Daraj and OCCRP.
However, the source of the funding and its legitimacy were not disclosed at that time.
Two years later, suspicions were enough for the German judge to issue an order to freeze these assets and stakes, categorising the alleged misconduct as “joint money laundering in four instances”.
Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
Europa League semi-final, second leg
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50-man Royal Rumble
Universal Championship
Brock Lesnar (champion) v Roman Reigns
Casket match
The Undertaker v Rusev
Intercontinental Championship
Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe
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The Bludgeon Brothers v The Usos
Raw Tag Team Championship
Sheamus and Cesaro v Bray Wyatt and Matt Hardy
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Jeff Hardy (champion) v Jinder Mahal
Singles match
Triple H v John Cena
To be confirmed
AJ Styles will defend his WWE World Heavyweight title and Cedric Alexander his Cruiserweight Championship, but matches have yet to be announced
Tonight's Chat is a series of online conversations on The National. The series features a diverse range of celebrities, politicians and business leaders from around the Arab world.
Tonight’s Chat host Ricardo Karam is a renowned author and broadcaster who has previously interviewed Bill Gates, Carlos Ghosn, Andre Agassi and the late Zaha Hadid, among others.
Intellectually curious and thought-provoking, Tonight’s Chat moves the conversation forward.
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
Starring: Abdulla Zaid, Joma Ali, Neven Madi and Khadija Sleiman
Two stars
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Strait of Hormuz
Fujairah is a crucial hub for fuel storage and is just outside the Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.
The strait is 33 km wide at its narrowest point, but the shipping lane is just three km wide in either direction. Almost a fifth of oil consumed across the world passes through the strait.
Iran has repeatedly threatened to close the strait, a move that would risk inviting geopolitical and economic turmoil.
Last month, Iran issued a new warning that it would block the strait, if it was prevented from using the waterway following a US decision to end exemptions from sanctions for major Iranian oil importers.
Five expert hiking tips
Always check the weather forecast before setting off
Make sure you have plenty of water
Set off early to avoid sudden weather changes in the afternoon
Wear appropriate clothing and footwear
Take your litter home with you
