The Lebanese central bank chief has been probed by a $ 300 million corruption scam

The Swiss Attorney General is investigating allegations that the governor of the Lebanese central bank and his brother withdrew more than $ 300 million from that organization through transactions with a mysterious company outside that organization.

“At least since April 2002, it seems that the governor of the central bank, Riad Salame, with the help of his brother, Raja Salame, has organized defense operations… Exceeding $ 300 million to the detriment of the Banque du 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 is available online on a Lebanese news site. A Lebanese official confirmed the authenticity of the letter. The Swiss Attorney General’s Office has confirmed to FT that “the criminal investigation has been aggravated by money laundering… In connection with possible compensation to the Bank of Lebanon.

In an interview with FT this week, the central bank did not deny that transactions took place. But he said that “not a single dollar in the operations you mentioned was to the detriment of the BdL,” he added: “He accepted all these transactions. [BdL’s] central board ”.

It is the latest scandal to hit Lebanon’s longtime central bank governor, which he believed strengthened the fragile nation through regional wars and the global financial crisis. But Salame, who claims to be a victim of a “dirt campaign,” has been under fire since the local currency fell, releasing hyperinflation. The country is suffering the worst financial and economic crisis for three decades, many Lebanese have been blamed, as well as national politicians, for mismanaging monetary policy and reserves.

The Swiss Attorney General is investigating more than $ 330 million in transactions between 2002 and 2015, from a BdL account under the name “Forry Associates” to an HSBC Swiss account. Swiss investigators complained that this dark offshore company was controlled by Salame’s brother Raja. Hundreds of millions were then channeled from Forry to the Swiss bank accounts both controlled by Salames, the investigators complained in the letter.

The BdL granted him a non-exclusive mediation contract with Forry in 2002, signed by Riyadh and Raja Salame. Four former senior Lebanese bankers, who knew the bond trade at the time it was hired by Forry BdL, said they were unaware of the company.

The $ 333 million transferred to Forry, $ 248 million, was channeled to Raja Salame’s personal account at HSBC, Swiss investigators said in a letter to Lebanese counterparts, and their details have been leaked to the Swiss and Lebanese media. For less than $ 10 million, they went to two alleged accounts controlled by Riad Salame, controlled by Julius Baer under the name “Westlake Commercial Inc.” in Panama, and the Swiss “SI 2 SA”At the EFG Bank in Zurich. More than 7 million Swiss francs went from SI 2 SA to a UBS account “by name”Red Street 10 SA“It was used to buy Swiss goods,” the researchers complained. Red Street translates “Sharia Hamra” into Arabic, Beirut Street, the BdL’s headquarters.

Riad Salam refused to clarify who was running Forry, whether the brother had signed the contract or was behind Westlake or SI 2 SA. He said the BdL account he was paying for was a “compensation account” and that the money came from “participants in the operation”.

“[T]the number you’re talking about is over 14 years old, not in a shot or a deal, so the average is no more than $ 20 million a year, ”Salame added. Denying the conflict of interest, Salame said Forry “had no exclusivity and therefore no special treatment.” Recalling that this business made millions of dollars, Salame said, “Is this illegal? What would be illegal? [is] if we had [ie. BdL] they were paying the commission. “

Registered in the British Virgin Islands in 2001, Forry was disbanded in 2016, according to BVI records. Escaped documents Forry was It is the most nominee, Another company registered with BVI with hidden owners. FT could not contact Nomihold.

Raja Salame, who is on the board of Lebanese real estate giant Solidere, declined to complain. “My integrity has never been questioned. I’ve always earned my money in a legitimate way, ”he told FT.

Four former members of the BdL management, who had been working for the period and spoke on condition of anonymity, said they did not remember accepting the transactions made with Forry. Riad Salame refused to register records confirming the decisions of the central council, citing a secret bank.

The Swiss researcher, who is credited with Riad Salame in the liquid assets held in Switzerland with about $ 50 million, is testing some $ 15 million transactions from BdL bank accounts to Salame UBS, Credit Suisse and Banque Pictet & CIE personal accounts between 2012 and 2019. Salame said the BdL accounts were his own, that he had transferred his money and that he had denied transfers in 2019. He said he was a source of personal wealth derived from the $ 23 million he earned as a banker in 1993 before becoming governor.

Credit Suisse, HSBC Switzerland, UBS and Julius Baer said they were not allowed under Swiss law to comment on customer issues. In a statement, Pictet & Cie said: “Our policy is not to comment on issues that are the subject of an ongoing investigation, especially when people’s names are at stake.” He said he was cooperating with authorities.