The Attorney General of Switzerland is investigating allegations that the governor of the central bank of Lebanon and his brother embezzled more than $ 300 million from this institution through transactions at a mysterious offshore company.
“Since at least April 2002, it seems that the governor of the central bank, Riad Salame, with the help of his brother, Raja Salame, has organized embezzlement operations. . . exceeding $ 300 million to the detriment of the Banque du Liban [BdL]”Wrote the office of the Swiss Attorney General in a letter to the Lebanese authorities requesting mutual legal assistance.
The letter, sent in November last year, was leaked and is 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 FT a “criminal investigation into suspicion of aggravated money laundering. . . in the context of a possible embezzlement of funds to the detriment of the Banque du Liban ”, and that it had requested the help of the Lebanese“ competent authorities ”. He declined to comment further.
In an interview with the FT this week, the central banker did not deny that the transactions had taken place. But he said “not a dollar that was in the operations you mention was to the detriment of the BdL”, adding: “all these transactions were approved by the [BdL’s] central panel ”.
It is the latest scandal to strike the powerful longtime governor of Lebanon’s central bank, once hailed for stabilizing the fragile nation through regional wars and the global financial crisis. But Salame, who claims to be the victim of a “smear campaign”, has come under fire since the collapse of the local currency, triggering hyperinflation. With the country that suffers the most financial and economic crisis for three decades, many Lebanese criticized him and the country’s politicians for mismanaging monetary policy and reserves.
The Attorney General of Switzerland is examining transactions worth more than $ 330 million made between 2002 and 2015, from an account at BdL to an HSBC Switzerland account in the name of “Forry Associates”, according to the letter. Swiss investigators alleged that this obscure offshore company was controlled by Salame’s brother, Raja. Hundreds of millions were then funneled from Forry to Swiss bank accounts controlled by the two Salames, investigators alleged in the letter.
The BdL had awarded Forry a non-exclusive brokerage contract in 2002, indicates the letter, signed by both Riad and Raja Salame. Four senior Lebanese former bankers familiar with bond trading at the time Forry was hired by the BdL said they had not heard from the company.
Of the $ 333 million transferred to Forry, $ 248 million was funneled into Raja Salame’s personal account at HSBC, Swiss investigators told their Lebanese counterparts in the letter, details of which were widely reported in the media. Swiss and Lebanese. Just under $ 10 million went to two accounts which, according to investigators, were controlled by Riad Salame, under the name of “Westlake Commercial Inc”, registered in Panama, with Julius Baer, and registered in Switzerland.SI 2 SA»At EFG Bank in Zurich. More than 7 million Swiss francs were transferred from SI 2 SA to a UBS account under the name “Red Street 10 SAWhich was used to buy Swiss property, investigators alleged. Red Street translates to “Sharia Hamra” in Arabic, the street in Beirut where BdL is located.
Riad Salame declined to say who ran Forry, if his brother had signed the contract, or if he was behind Westlake or SI 2 SA. He said the BdL account that paid Forry was a “clearing account” and that the money came from “the participants in the operation”.
“[T]The amount you are talking about is over 14 years, not in one shot or in one transaction, so the average does not exceed $ 20 million per year, ”Salame added. Denying the conflicts of interest, Salame said Forry “had no exclusivity and therefore there is no special treatment”. When it was insisted that this business had made millions of dollars, Salame said, “Is this illegal? What would be illegal [is] if we [ie. BdL] were paying the commission.
Registered in the British Virgin Islands in 2001, Forry was disbanded in 2016, according to BVI records. Leaked documents show Forry was property of Nomihold, another BVI registered company with hidden owners. The FT was unable to contact Nomihold.
Raja Salame, who sits on the board of Lebanese real estate giant Solidere, declined to comment on the allegations. “My integrity has never been questioned. I have always legitimately earned my money, ”he told FT.
Four former members of BdL’s central board, who served during the reporting period and spoke on condition of anonymity, said they did not recall approving transactions with Forry. Riad Salame refused to show files confirming the decisions of the central council, citing banking secrecy.
Swiss investigators, who attributed around $ 50 million in liquid assets held in Switzerland to Riad Salame, are also probing some $ 15 million in transactions between BdL bank accounts and Salame’s personal accounts with UBS, of Credit Suisse and Banque Pictet & CIE between 2012 and 2019. Salame said the BdL accounts belonged to him, transferred his own money and he denied that any transfers were made in 2019. He said the source of his personal wealth came from the $ 23 million he earned as a banker before becoming governor in 1993.
Credit Suisse, HSBC Switzerland, UBS and Julius Baer have said they are not allowed under Swiss law to comment on clients’ affairs. In a statement, Pictet & Cie said: “Our policy is not to comment on matters which are still the subject of an ongoing investigation, particularly where the names of individuals are at stake.” He said he was cooperating with the authorities.