Noting that the delegation currently in Beirut represents the judicial authorities in France, Germany and Luxembourg, which are conducting joint investigations with three other European countries, Switzerland, Belgium and Liechtenstein, into suspicions of embezzlement, illegal enrichment and money laundering, which revolve around the Governor of the Banque du Liban. Riad Salameh (cf the cities).
Proven embezzlement
The sure issue in the investigations so far is that the investigators have decisively proven the element of embezzlement and illegal enrichment in the operations of the Governor of the Banque du Liban, Riad Salameh, and his partners in Beirut, while their efforts are currently focused on drawing a map of money laundering operations, which aimed to hide the source of assets. that have been embezzled.
The Lebanese commercial banks concerned with the file confirmed, during previous investigations, that they had purchased Eurobonds and Banque du Liban certificates of deposit directly from the Central Bank, without going through any intermediary, and without paying any commission to any third party. In all contracts for the purchase of these financial products, there was no reference to the Fawry company, which is owned by the brother of the ruler, Raja Salameh, and there was no reference to the commission that any party would charge. In a clearer sense, the ruler’s brother’s company did not provide any of the alleged financial services, which it claimed to provide to obtain commissions from the accounts of the Banque du Liban.
To enable the company to obtain these commissions, Riad Salameh signed in 2001 – in his capacity as Governor of the Banque du Liban – a contract with his brother’s company, in which he granted it the right to act as an agent for the Central Bank to sell Eurobonds and certificates of deposit to commercial banks, in exchange for a commission of 0.375% of the value of the bonds. and certificates of deposit sold. Certainly, this fictitious company did not provide any of the services stipulated in the contract, and there was no justification for appointing a company of this kind as an intermediary between the Central Bank and commercial banks. However, the contract was nothing but a cover for the implementation of the embezzlement that took place, from the proceeds of selling Eurobonds and certificates of deposit.
Under the guise of this contract, the Governor of the Banque du Liban transferred more than $330 million, from the proceeds from the sale of Eurobonds and bank certificates of deposit, from the accounts of the Banque du Liban to an immediate company account in Switzerland. In practice, the banks had paid all this money to the Banque du Liban as part of the price of the bonds and certificates of deposit, while the ruler deducted this “commission” from the proceeds of the sales operations, and transferred it to Fawry as the alleged broker who sold these financial products.
On this basis, the suspicion of embezzlement and illicit enrichment was established on the commission collection process that took place between the Banque du Liban and the Fawry Company. The investigations documented this aspect of the suspicions through the testimonies of the bankers, who confirmed that they did not know the existence of the company or its role when conducting purchases of financial products from the Banque du Liban, as well as through the purchase contracts for these products, which did not stipulate the existence of an immediate company as an intermediary acting on behalf of the bank. Lebanon bank. Noting that hiding the role of Fawry at that stage, and not mentioning it in contracts or when conducting financial product sales, confirms that the idea of an intermediary between the Central Bank and banks was not a logical idea that could be disclosed explicitly at that time, and that what happened was not It goes beyond the limits of outright theft of public funds that were supposed to flow into the budget of the Banque du Liban.
Four stages of money laundering
After embezzling the amount in Beirut, Riad and Raja Salameh sought to launder this money, through a complex network of bank accounts and intermediary entities registered in tax havens. Like any money laundering operation, the two brothers sought – through complex operations – to hide the real source of funds, and then convert them into investment and real estate assets naturally owned by the Governor of the Banque du Liban. According to the data that became available in this file, it is clear that the Salama brothers laundered this money in four stages:
The first stage: All commissions, with a value exceeding $330 million, were transferred in stages, from an intermediary account at Banque du Liban to an immediate corporate account at HSBC Bank in Switzerland. And this account represented the “bottleneck” through which all the sums that were collected under the cover of the company by Raja and Riad Salameh went through.
The second stage: $220 million of the commission value was transferred from a Fawry company account in Switzerland to Raja Salameh’s personal accounts in Lebanon, while $86 million was transferred to other intermediary companies abroad, registered in the name of Raja Salameh and the mother of his son Salameh Anna Kozakova and others. Ruler’s partners in the file.
The third stage: These amounts were distributed between accounts owned by Riad Salameh personally in Lebanon, Switzerland and the United States of America, and other companies owned by the ruler in Luxembourg. And at this particular stage, the amounts were returned from the accounts of the ruler’s partners to accounts and companies registered in his personal name, which represented the most important confirmation that Riad Salameh is the final beneficiary of the commissions associated with Fawry.
The fourth stage: The proceeds of the commissions that landed in the accounts of companies owned by the Governor of the Banque du Liban were used to purchase real estate in the markets of the United Kingdom, Belgium, France and Germany.
Banks in the eye of the storm
Sources following up on the file indicate that all banks that purchased Eurobonds and certificates of deposit were able to prove that they were unaware of the existence of commissions linked to Fawry, which is likely to remove the charge of complicity in this file. However, the six banks concerned with receiving transfers from the Fawry company in Switzerland to Raja Salameh’s accounts in Lebanon will need, during the next stage, to confirm their due diligence related to combating money laundering, that is, they take the obvious procedures required of them to verify the source of funds and their legality. These banks, in particular, received 220 million dollars in Raja Salama’s accounts with them, out of the 330 million dollars that were embezzled, which helped Raja Salama to launder the embezzled funds.
The developments of the coming days are supposed to answer questions related to the role of Lebanese banks in the money laundering operations that took place, through the clarifications that the banks will provide to the European investigation delegation. However, the most important problem remains the complete absence of Lebanon from the role it is supposed to play, at the level of trying to recover the public funds that were wasted in this case. As for the main reason, it is the intentional failure of the Minister of Finance to appoint a state attorney for this case, which would allow European countries to be required to seize assets of suspected origin in the interest of the Lebanese state, instead of limiting the existing seizures today to those imposed by the European authorities. This inaction may threaten, in the future, the loss of Lebanon’s right to these funds, in the event that Riad Salameh is able to reach a settlement, according to which he will pay large fines to the European authorities in exchange for liberating his assets abroad.