Riad salameh news

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State services have been battered, including the electricity sector, leaving those who can afford the cost to rely on private generators.

‘Another Riad Salame’

Two camps had emerged in response to Souaid’s candidacy.

On one side were the banks, banking lobby, most of the significant traditional parties – including ideological adversaries like Hezbollah and the Lebanese Forces – and President Joseph Aoun, whose economic adviser, Varouj Nerguizian, is a board member of Souaid’s investment firm.

On the other side were some reformist ministers, independent MPs, reform-minded NGOs, and sceptics, including Prime Minister Nawaf Salam.

After Souaid was voted in, Salam delivered a speech admitting he and other ministers had reservations about the new appointment.

“Any governor must abide by the financial policy of our reformist government as expressed by the ministerial statement [that includes] a new programme with the International Monetary Fund, restructuring banks, and devising a complete plan according to the best international standards to preserve depositors’ rights,” Salam said.

Souaid has yet to comment on what his plan for the central bank would be.

But those opposed to Souaid say he is too close to power and his policies overwhelmingly favour the banking lobby.

The inquiry looks into whether Salameh used his brother’s brokerage firm, Forry Associates Ltd, to charge hidden commissions on BDL’s dealings which were then invested in real estate across Europe.

In May, Interpol issued two separate red notices against Salameh at the request of France and Germany.

French prosecutors charged him with “criminal association with a view to commit offenses”, organised money laundering, and “aggravated tax fraud”, while Germany is charging him with “jointly committed money laundering, money laundering on a repetitive and gainful basis”, according to Interpol’s website.

But Salameh remained in power, despite calls to remove him.

Prime Minister Najib Mikati was suspected of protecting Salameh for his own political interests, angering the Lebanese people further.

Salameh had harnessed enough power and support to become quasi-untouchable.

“The authorities have not done anything … they don’t want to,” he says.

Saidi also says he “sees no appetite in the political class for reforms”.

The former minister, who once returned to Lebanon to rebuild because he “believed in the future”, doesn’t think people will come back this time.

“Unless you have a change in the rules of the game, political reform, banking sector reform, economic reforms, why would they come back?”

Is Lebanon’s new central bank governor ‘another Riad Salameh’?

Beirut, Lebanon – Lebanon’s council of ministers has elected Karim Souaid as central bank governor – a candidate backed by the country’s bank lobby and a businessman who many say is emblematic of the malaise Lebanon is suffering.

Just out of a brutal war with Israel, Lebanon is in dire need of reconstruction and recovery money.

Lebanon does not extradite its citizens.

He was accused by many in Lebanon of being responsible for the country’s financial crisis since late 2019.

Salameh has repeatedly denied allegations of corruption, embezzlement and illicit enrichment. In addition, Salameh been charged with forgery, money laundering and tax evasion.

He is being investigated for embezzlement by prosecutors in Belgium, France, Germany, Liechtenstein, Luxembourg, and Switzerland.

We respect the judiciary’s decision,” caretaker Justice Minister Judge Henry Khoury said.

Caretaker Prime Minister Najib Mikati told pan-Arab broadcaster Al-Hadath that the government will not intervene in the case.

He was in charge of the top body for monitoring money laundering and controlled the audits made on BDL accounts, most of which were never published.

In an interview with local broadcaster LBC, Salameh denied any wrongdoing.

“I believe … the central bank monetary policies contributed to establishing stability and economic growth,” he said.

He declined Al Jazeera’s requests for comment.

‘Unless you change the rules of the game’

It is unclear what will happen to Salameh next.

Facing arrest overseas, he will likely stay in Lebanon, where the law does not allow extradition, to face his legal battles.

The country started to spend more than it received.

So Salameh launched a financial engineering programme in 2016, which involved banks offering one-of-a-kind high returns on US dollar deposits to maintain foreign currency reserves, essentially bailing out struggling banks.

“This was not approved by the government, it was not approved by parliament, and it was not even approved by the central council of the BDL.

Here was Riad Salameh giving gifts to the banks, to the banks’ shareholders,” says Saidi.

The programme was kept alive by depleting the bank’s own reserves, with the World Bank describing it as a “Ponzi scheme” in an August 2022 report.

Eventually, Lebanon’s financial system exploded in 2019.

In October 2019, a popular uprising toppled the government of Saad Hariri, spooking foreign investors.

During the crisis, many depositors withdrew their money while the Lebanese lira was plummeting, while some of the country’s wealthiest moved their money abroad.

‘It’s a mafia’

In 2020, the Hassan Diab government proposed a solution that experts told Al Jazeera would have met the IMF’s specifications.

Now a wanted man, Lebanon’s central bank head steps down

Beirut, Lebanon – Riad Salameh’s term as governor of Lebanon’s central bank is coming to an end after 30 years amid charges at home and abroad of money laundering, fraud and embezzling public funds.

As the 73-year-old’s term ends on Monday, Lebanon’s financial losses stand in excess of $72bn, more than three times its gross domestic product (GDP) in 2021, according to the World Bank.

‘Winning strategies’ fail

The economist was tasked with rebuilding Lebanon’s banking sector after the civil war, financing the reconstruction of destroyed cities, attracting funding and, crucially, luring back the millions of Lebanese who fled the conflict.

To do that, Salameh offered high interest rates, attracting deposits and remittances from the vast Lebanese diaspora and wealthy Arabs – and winning him accolades.

The Lebanese lira stood pegged at 1,507 to the US dollar for decades, and confidence in Salameh’s “winning strategy” continued.

“It was a period of rapid expansion in the Lebanese banking sector.

He has said he will appeal the Interpol notices.

In the last weeks, Salameh has appeared before the courts but few Lebanese believe this will result in any answers, given Lebanon’s highly politicised judiciary.

One of the investigating judges, Ghada Aoun, was accused of bias and dismissed from the case in May shortly after charging Salameh.

“They’re punishing me for doing my job,” she told reporters at the time.

But his final months were marred by allegations of financial crimes including illicit enrichment through public funds by authorities in Lebanon and several other countries.

He is wanted by authorities in France for alleged financial crimes, with Interpol issuing “red notices” targeting him. To recover depositors’ money, they say, the state should pay the banks back through actions like selling off state assets.

Protests against the country’s sectarian system led to violent clashes between factions and the instability was worsened by civil war breaking out in neighbouring Syria. Former Prime Minister Najib Mikati’s son Maher is also a board member of Souaid’s investment firm.

“They’re trying to bring in another Riad Salameh,” said Mohammad Farida, economic adviser for the Depositors Union, an NGO that argues that banks and not depositors should be held accountable for the 2019 financial crisis.

Salameh is the former central bank governor who was arrested in September for financial crimes in Lebanon and is the subject of numerous financial investigations in five different European countries.

Every minister will be ‘held accountable’

Lebanon is entering the sixth year of a devastating economic crisis and badly needs relief funds from the IMF, which has laid out several reforms Lebanon needs to apply to receive those funds.

A parallel battle for accountability for the tens of billions in economic losses has been at an impasse for five years as the political class, backed by the banking lobby, focused on scuttling any effort at passing reforms the IMF deems critical to unlock $3bn in relief funds.

The fight essentially comes down to who should bear responsibility for the 2019 economic collapse and bear the losses.

The pro-banker side believes the state is primarily responsible for the collapse after defaulting on eurobonds.

He is widely believed to back the Soldiers of God (Jnoud el-Rab), a gang of men who quote Christian scripture and gained notoriety for targeting Lebanon’s LGBTQ community with violence.

In the run-up to the vote for central bank governor, media outlets Megaphone and Daraj reported that Sehnaoui had filed lawsuits against them.

The deeply rooted influence bankers like Sehnaoui have over the Lebanese system is largely why the state struggles to serve its citizens, critics say.

“It’s a mafia and [the bankers] are the oligarchs,” Fouad Debs, a lawyer and member of the Depositors Union, told Al Jazeera.

Debs said Souaid’s confirmation was a setback for a just solution to Lebanon’s economic crisis and it will deeply affect depositors and the state.

“The appointment of Souaid is disastrous,” he said, adding that the state is likely to take on the tens of billions of dollars in debt instead of the banks.

Critics like Debs say, because many politicians are funded by bankers or are shareholders in banks themselves, they try to bring Lebanon’s economic policy in line with the banks’ interests even if it contradicts the public interest.

For years, the banks have benefitted from banking secrecy laws that reformists and the IMF say need to change.

Opponents to the new central bank governor will now push to try and come up with a recovery plan they feel is fair to depositors, but it will be an uphill battle after Souaid’s appointment.

“They are turning the country into a private company for maybe a few thousand individuals who will literally have control over most of the wealth in the country,” Debs said.

“It’s very dangerous and the country will change completely.”

Lebanon’s former central bank chief Riad Salameh arrested

Lebanon’s former central bank governor, Riad Salameh, has been arrested after a hearing at the country’s judicial palace, according to Lebanese state media.

The state-run National News Agency (NNA) said Judge Jamal al-Hajjar, who holds the position of public prosecutor, detained 73-year-old Salameh after interrogating him on Tuesday.

Who benefitted?

“What is the function of any governor of the central bank?” asks Toufic Gaspard, Lebanese economist and former adviser at the International Monetary Fund (IMF).

“To preserve the stability of the currency and more important, preserve the stability of the banking sector.

Since 2019, Lebanon has suffered through one of modern history’s worst economic crises. Banks ran out of dollars to pay depositors and closed their doors – many remain closed.

The pandemic and the explosion at the Beirut port were blows to an already sinking ship. He insists that his wealth comes from inherited properties, investments and his previous job as an investment banker at Merrill Lynch.

Salameh was questioned on Tuesday by al-Hajjar for over three hours, the Associated Press news agency reported, citing three judicial officials who spoke on condition of anonymity because they were not authorised to discuss the case with the media.

Salameh was interrogated over several financial matters, including a case in which he allegedly hired a company called Optimum to manipulate financial statements and conceal Lebanon’s haemorrhaging financial losses.

Two judicial sources told the Reuters news agency that the former central bank chief was accused of accruing more than $110m via financial crimes involving Optimum Invest, a Lebanese firm that offers income brokerage services.

One source said the specific charges that led to his arrest on Tuesday were embezzlement, money-laundering and fraud as part of commissions earned through the central bank’s dealings with Optimum between 2015-2018.

The officials said that Lebanon’s Internal Security Forces transferred Salameh to a more secure prison but did not disclose further details.

Before the crisis, the lira stood at 1,500 to the US dollar – today, $1 is equal to 89,000 lira.

With many of the country’s former middle class thrust into poverty, some citizens were forced to hold up banks to withdraw their money.

After the vast destruction caused by Israel’s latest war on Lebanon, the need for reconstruction money is increasingly pressing.

He is expected to remain in custody while he is interrogated.

“The judiciary has spoken. So you have this combination of support of the major beneficiaries and that’s why he remained in power for so long,” he adds.

But recently, Salameh was charged with money laundering, fraud and embezzlement to the tune of $330m in Lebanon and abroad.

He had also been charged in Lebanon with illicit enrichment.

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