Lebanon’s Central Bank Governor Riad Salameh speaks during a news conference at Central Bank in Beirut, Lebanon, 11 November, 2019. (Photo credit: Mohamed Azakir/Reuters)
The Lebanese Ministry of Justice has asked the judiciary to arrest Lebanese Central Bank Governor Riad Salameh, his brother Raja Salameh, and his assistant Marianne Majid Howayek, as well as to seize their properties and freeze their bank accounts, the Lebanese National News Agency reported.
The request came after Riad Salameh was absent from a hearing held on 15 March by a local judge along with European investigators, who were tasked to investigate charges against the central bank governor, including “bribery, forgery, money laundering, illicit enrichment, and tax evasion.”
Salameh evaded his arrest and failed to show up for questioning before judicial authorities multiple times due to US protection. On 17 February, US Ambassador to Lebanon Dorothy Shea told Prime Minister Najib Mikati to block a subpoena demanding Salameh appear in court.
Salameh, 71, is currently the subject of an international probe, with the European nations of Luxembourg, Switzerland, and France all seeking to investigate allegations of money laundering and embezzlement.
France, Germany, and Luxembourg seized properties and froze assets belonging to Salameh worth 120 million euros in a major operation linked to money laundering last March.
The accusations stem from the activities of a brokerage firm Salameh and his brother established, Forry Associates, that took some $330 million in fees for brokering the sale of government bonds between 2002 and 2015, $200 million of which were allegedly transferred to Salameh’s personal accounts with various Lebanese banks.
The sale of these government bonds was at the heart of a banking Ponzi scheme established by Salameh that became unsustainable and finally began to collapse in October 2019. This resulted in a financial crisis that caused the value of the Lebanese lira to crash by some 90 percent, wiping out the life savings of many and causing widespread poverty as prices of everything, including essential goods, skyrocketed. Total losses for depositors amounted to roughly $111 billion.
Despite the key role played by Salameh in establishing, benefitting from, and finally collapsing the Lebanese banking system and, subsequently, the entire economy, Salameh continues to enjoy diplomatic and political support from Washington.
In February 2020, amidst criticism of Salameh’s role in precipitating the crisis, US Ambassador Shea suggested to Lebanese TV it was “a mistake to scapegoat any one person or institution for Lebanon’s economic collapse” and that Salameh still “enjoys great confidence in the international financial community.”
The reason for this was provided, at least in part, in April 2019 when Lebanese newspaper Al-Akhbar published minutes of a meeting between the US Assistant Secretary of the Treasury for Terrorism Financing and Financial Crimes, Marshall Billingsley, and the (former) Lebanese Economy Minister, Mansour Bteish.
“We need a governor of the Banque du Liban [central bank] and a deputy governor who we can trust, and who is sensitive and with whom confidential information about terrorist financing and money laundering can be exchanged. The situation today is that we trust Governor Riad Salameh and (former) Deputy Governor Muhammad Baasiri,” the report read.