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The Swiss Attorney General is investigating allegations that the governor of Lebanon’s central bank and his brother embezzled more than $ 300 million from that institution through transactions with a mysterious offshore company.
“At least since April 2002, it appears that the governor of the central bank, Riad Salame, with the help of his brother, Raja Salame, organized embezzlement operations… Exceeding $ 300 million to the detriment of the Bank of Lebanon [BdL]”, Wrote the Swiss Attorney General’s Office in a letter to the Lebanese authorities requesting mutual legal assistance.
The letter, sent in November last year, was leaked and publicly available online on a Lebanese news site. A Lebanese official confirmed the authenticity of the letter. The Swiss Attorney General’s Office confirmed to the FT a “criminal investigation into suspicions of aggravated money laundering … in connection with a possible embezzlement to the detriment of the Banque du Liban”, and that it had requested assistance from the Lebanese “competent authorities.” He declined to comment further.
In an interview with FT this week, the central banker did not deny that the transactions took place. But he said that “not a single dollar that was in the transactions you mention was to the detriment of BdL,” and added, “all these transactions were approved by the [BdL’s] central board ”.
It is the latest scandal to affect the powerful governor of Lebanon’s central bank, once hailed for consolidating the fragile nation through regional wars and the global financial crisis. But Salame, who claims to be the victim of a “defamation campaign,” has been burned since the collapse of the local currency, triggering hyperinflation. With the country suffering the worst financial and economic crisis for three decades, many Lebanese blame him, as well as the nation’s politicians, for mismanagement of politics and monetary reserves.
According to the letter, the Swiss Attorney General examines transactions of more than $ 330 million made between 2002 and 2015, from a BdL account to an HSBC Switzerland account in the name of “Forry Associates”. Swiss investigators alleged that this obscure offshore company was controlled by Salame’s brother, Raja. Hundreds of millions were then redirected from Forry to Swiss bank accounts controlled by both Salames, according to researchers in the letter.
The BdL had awarded Forry a non-exclusive brokerage contract in 2002, according to the letter, signed by Riyadh and Raja Salame. Four former senior Lebanese bankers, familiar with bond trading at the time Borry hired Forry, said they had not heard of the company.
Of the $ 333 million transferred to Forry, $ 248 million went to Raja Salame’s personal account on HSBC, Swiss researchers told their Lebanese counterparts in the letter, details of which have been widely reported in Swiss media. and Lebanese. Just under $ 10 million went to two accounts that investigators alleged were controlled by Riad Salame, with the name “Westlake Commercial Inc” registered in Panama to Julius Baer and registered in Switzerland. “SI 2 SA”EFG Bank in Zurich. More than 7 million Swiss francs flowed from SI 2 SA to a UBS account called “Carrer Vermella 10 SA“, Which was used to buy Swiss properties, the investigators alleged. The red street translates to” Sharia Hamra “in Arabic, the street in Beirut where the BdL headquarters is located.
Riad Salame refused to clarify who ran Forry, whether his brother signed the contract or whether he was behind Westlake or SI 2 SA. He said the BdL account paid by Forry was a “clearing account” and that the money came from the “participants in the operation”.
“[T]the amount you are talking about is more than 14 years old, neither in a single shot nor in an agreement, so the average does not exceed $ 20 million a year, “Salame added. Denying the conflict of interests, Salame said Forry “had no exclusivity and therefore no special treatment.” When pressured that this business had made millions of dollars, Salame said, “Is it illegal? illegal? [is] if we [ie. BdL] they paid the commission “.
Registered in the British Virgin Islands in 2001, Forry disbanded in 2016, according to BVI records. Filtered documents show that Forry was owned by Nomihold, another company registered in BVI with hidden owners. FT has not been able to contact Nomihold.
Raja Salame, who is part of the board of Lebanese real estate giant Solidere, declined to comment on the allegations. “My integrity has never been questioned. I’ve always earned my money legitimately, ”he told FT.
Four former members of the BdL central board, who served during the relevant period and spoke on condition of anonymity, said they did not remember approving the transactions at Forry. Riad Salame refused to show records confirming the decisions of the central council, citing banking secrecy.
Swiss researchers, who attributed about $ 50 million in Swiss-owned liquid assets to Riad Salame, are also investigating about $ 15 million in BdL bank account transactions in Salame’s personal accounts at UBS, Credit Suisse and Banque Pictet & CIE between 2012 and 2019. Salame said the BdL accounts belonged to him, he transferred his own money and denied that transfers were made in 2019. He said the source of his personal wealth came from 23 million dollars he earned as a banker before becoming governor in 1993.
Credit Suisse, HSBC Switzerland, UBS and Julius Baer said Swiss law did not allow them to comment on customer-related issues. In a statement, Pictet & Cie said: “Our policy is not to comment on issues that are still the subject of ongoing investigation, especially when it comes to people’s names.” He said he was cooperating with authorities.
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