For years, both domestic and international investigations were conducted against Lebanon’s former central bank chief, Riad Salameh. Now, the former governor has been charged and arrested in Beirut for embezzlement of public funds and illicit enrichment. Salameh is specifically accused of embezzlement, money laundering, and fraud related to commissions he allegedly pocketed during the central bank’s dealings with Optimum Invest. These transactions with the Lebanese brokerage firm reportedly earned him more than $110 million between 2015 and 2018, according to judicial sources confirmed by Reuters.
Salameh was interrogated at the Justice Palace in the Lebanese capital, as reported by the state news agency NNA. The 74-year-old is expected to be held there for four days before his case is handed over to the Beirut public prosecutor. Neither Salameh nor his lawyer have commented on the new allegations. Optimum Invest responded by referring to a statement stating that a financial audit at the end of 2023 “found no evidence of misconduct or illegal activity” in the company’s dealings with the central bank.
Salameh has also been under investigation in several European countries for some time. He, along with his brother Raja, is suspected of illegally transferring hundreds of millions of dollars out of Lebanon over many years and laundering the money abroad. A complex network of offshore companies was used for this purpose. The brothers allegedly invested the money in luxury real estate in various locations across Europe. In March, the Swiss financial regulator reprimanded Banque Audi (Suisse) in the Salameh case for serious failures in anti-money laundering prevention. A few months ago, HSBC Geneva was also sanctioned for transactions believed to be linked to the former Lebanese central bank chief. According to the regulator, HSBC Geneva seriously breached its due diligence obligations to prevent money laundering in dealings with “two politically exposed persons” in Lebanon. More than $300 million, which came from a state institution, were transferred from Lebanon to Switzerland and largely flowed back to accounts in Lebanon shortly afterward, according to the regulator.
The HSBC account was thus a pass-through account. HSBC should have reported this immediately to the anti-money laundering authorities but only did so in 2020. As a result, the Swiss Federal Prosecutor’s Office launched an investigation and, in 2021, submitted a request for legal assistance to Lebanon. In 2023, the French prosecutor’s office also issued an arrest warrant for Salameh, followed shortly by German prosecutors. Investigations against Salameh are also ongoing in Luxembourg and Liechtenstein. Since last year, he has been on Interpol’s wanted list. However, Lebanon does not extradite its citizens.
Salameh is also controversial in his home country. Nevertheless, he led Lebanon’s central bank for thirty years, retiring last year at the age of 73. Once hailed for rebuilding Lebanon after its 15-year civil war, today the country is mired in its worst economic and financial crisis. “For 27 of the 30 years I was at the helm of the central bank, I contributed significantly to the stability of the country and its economy,” he said upon his departure. However, this supposed stability was funded by increasing debt.
In 2019, the system collapsed, and the Lebanese economy imploded. Inflation skyrocketed from 3% in 2019 to over 200% last year, according to World Bank data. Unemployment stood at 11.6% in 2023. Since the end of President Michel Aoun’s term in October 2022, Lebanon has been without a head of state, and the government is only acting in a caretaker capacity. The central bank is being led on an interim basis by the first deputy governor, Wassim Mansouri, a Shiite lawyer and distant cousin of Nabih Berri, the parliamentary speaker. A successor has not yet been named due to political infighting.
Salameh’s arrest comes as a surprise. Ongoing cases in Lebanon had previously made little progress. As recently as 2022, Prime Minister Najib Mikati threatened to resign if Salameh were dismissed. There have been frequent rumors in Beirut that, if indicted, Salameh has enough compromising material to take down the entire elite of the country if necessary.
