The head of Lebanon’s Association of Banks said on Thursday that the country’s financial sector had returned to Iraqi authorities nearly all money hidden in Beirut banks by officials under former dictator Saddam Hussein.
The announcement came the day after the head of Lebanon’s General Security branch, Maj Gen Abbas Ibrahim, said that a joint operation with Iraqi authorities had prevented a $1 billion fraud scam targeting Iraqi branches of major Lebanese lenders. He announced that some suspects had been arrested.
Joseph Torbey, the head of the banking body that represents the major Lebanese lenders, said during a media conference on Thursday that the network had exploited the history of Iraq with its recent change of regime and targeted the Lebanese banking sector "within a framework of organized crime."
Lebanese investigators claim that the Iraqi network brought Iraqi individuals who share the same names as members of the former Saddam regime to the Lebanese banks and requested access to millions of dollars in deposits from before 2003. Some of the members supplied forged documents to support their claims.
The intelligence service said the network attempted to defraud Lebanon’s Bank Audi – one of the four largest lenders in Lebanon – but did not disclose whether any funds were obtained.
The members of the network are still at large and investigations are ongoing.
There have been numerous reports that members of the former regime smuggled funds abroad, including to Lebanon, through the United Nations Oil-for-Food Program, after economic sanctions were imposed on Iraq during the 1990s.
Mr Torbey said that a number of banks were working with Iraqi authorities to “restore the money of the former Iraqi regime of Saddam Hussein to the Iraqi Central Bank." He added that almost all of this money had now been returned.
The value of the funds is estimated to be in the hundreds of millions.
"The banking sector in Lebanon has become the victim of a vicious scheme to harm its reputation and the misleading rumours that spread across the media has caused confusion among the Lebanese society," Mr Torbey told journalists in Beirut.
Bank Audi issued a statement about the scam on July 17, thanking the Iraqi authorities and Lebanon’s General Directorate of General Security for their “intensive effort and timely action” over the network’s attempts to access the funds.
Bank Audi is one of several Lebanese banks that operates in 11 countries, including Iraq and across the region. Lebanon’s banking sector has remained stable amid the countries near continuous political upheavals, an influx of 1.5 million refugees who have strained the country’s resources and slow economic growth. Lebanon’s financial sector is crucial to the country’s struggling economy with lenders holding over $220 billion in assets (Dh 808 billion)