French prosecutors investigating Lebanese governor – reports

Riad Salameh has repeatedly denied allegations of money laundering and corruption
Riad Salameh, Central Bank of Lebanon

Prosecutors in France have opened an investigation into Lebanon’s central bank governor, Riad Salameh, over alleged money laundering, according to news agency Agence France-Presse.

AFP said its reporters had spoken to one source close to the investigation and another in France’s judiciary. The sources said that the prosecutors were investigating Salameh and his brother Raja over allegations of money laundering and “criminal association”.

Another report, in French newspaper Le Monde, said that a Swiss non-governmental organisation (NGO), Accountability Now, had sent a report to the prosecutors that helped prompt their enquiry. An NGO in France, Sherpa, and another in the UK, Guernica 37, have also publicly accused Salameh of major money laundering.

Swiss prosecutors confirmed at the beginning of the year that they were investigating the Central Bank of Lebanon (CBL). Unconfirmed reports in Lebanese media had said Salameh had told local authorities he was ready to be questioned in Switzerland as part of the investigation.

Salameh has held office since 1993, and is at the centre of the political and economic crisis in Lebanon. He has repeatedly denied all allegations of wrongdoing, including earlier accusations that he was involved in money-laundering.

Earlier this year, Salameh said he had registered assets to offshore companies, but that this was legitimate. He said he had acquired the assets during his successful career in private-sector finance, before becoming central bank governor.

Several critics of Salameh, including Lebanon’s caretaker prime minister, Hassan Diab, have accused Salameh of mishandling of the country’s financial sector.

One of Lebanon’s former finance ministers, Georges Corm, told Central Banking that both the CBL and the country’s commercial banks were essentially bankrupt. He also accused Salameh of working with the leaders of the country’s sectarian political parties to benefit from large-scale financial corruption.

The CBL has not responded to repeated requests from Central Banking to comment on these allegations. Salameh himself has denied the accusations that the CBL is bankrupt and that it had effectively taken over the assets of the country’s commercial banks.

But Lebanon’s potential external donors have joined Diab and other critics in demanding a full independent audit of the central bank. France is Lebanon’s former colonial power, and is taking a lead role in responding to its economic crisis.

The French government and the International Monetary Fund demanded a full independent audit of the central bank as a precondition for granting any aid to Lebanon. Salameh initially resisted the demand for an audit in 2020, but later agreed to it.

The firm contracted to carry out the audit, Alvarez & Marsal, walked off the job in November, saying basic information had been withheld from it. The CBL said Lebanon’s banking secrecy laws had prevented full disclosure, after which the Lebanese parliament voted to lift the laws for the audit.

On April 1, the country’s finance ministry accused the central bank of withholding documents from the auditors. Five days later, it said it expected that the audit would soon be completed.

Swiss investigation

The Office of the Attorney General of Switzerland confirmed in January that it was investigating the CBL in connection with possible criminal offences. In April, news website Daraj, which covers the Arab world, published a leaked letter from the Swiss OAG to Lebanese authorities.

The letter said the OAG was investigating governor Salameh and his brother Raja over the alleged laundering of over $300 million. It also said that the prosecutors were looking at the role played by CBL official Marianne Houwayek, a close adviser to Salameh.

The CBL has not responded to requests for comment before publication.

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