Two figures are competing for the title of “the actual ruler of Lebanon.” One is Hassan Nasrallah, the secretary general of Hezbollah, and the other is Riad Salameh, the governor of Lebanon’s central bank. The first has his own private army, an ethnic bloc of supporters, political partners in the government, protection and funding from Iran and the backing of Syria. The latter is “just” a central banker. Without any militias, weapons or a political base to rely on.
So where does Salameh, who has served continuously in his post since 1993, draw his power from? If Nasrallah is seen as the person who controls Lebanese politics, dictates the country’s internal and foreign policy, decides whether and when Lebanon will go to war – then Salameh controls the Lebanese economy. He decides what the dollar exchange rate will be, he builds – or more precisely, empties – the country’s foreign reserves, critically influences the state budget, and most of all, he knows very well the financial secrets of Lebanon’s political elite. He has in his hands the key to their downfall if he decides to expose their secrets. In the competition over the title of the most hated person in Lebanon, Salameh is the winner by far.
Salameh, 72, worked for two decades at Merrill Lynch before being appointed governor of the central bank. He is seen as being responsible for the deep economic crisis in Lebanon, for the horrible poverty, the destruction of the health and education services, the loss of control over the value of the Lebanese pound and depth of the corruption – of which he is one of its primary creators.
Last year, it seemed that this all powerful man was about to lose everything. The law enforcement authorities in Germany, France, Lichtenstein, Monaco – and Lebanon itself, opened an intensive investigation of Salameh on suspicions of money laundering of hundreds of millions of dollars, embezzling state funds and obtaining wealth illegally.
Last week, the Lebanese media outlet Daraj posted the document the Principality of Lichtenstein submitted to Lebanese legal authorities in which it requested to receive information on money transfers from Salameh’s accounts to accounts belonging to Taha Mikati, the brother of Lebanese Prime Minister Najib Mikati, in banks in Lichtenstein.
Federal prosecutors in Switzerland are also investigating suspicions of embezzlement of about $330 million, which was paid by the central bank in Lebanon to Salameh’s brother Raja, the owner of a company named Forry Associates registered in the Virgin Islands, as fees for signing up investors for the purchase of Eurobonds. It is suspected that $258 million of this sum was moved to Raja’s accounts in Switzerland, and then $207 million of this money was transferred to five accounts in his name in Lebanon.
Prosecutors in France are conducting a separate investigation against Salameh for money laundering through the purchase of luxury properties in Paris, which his brother is involved in too. At the same time, authorities in Switzerland and other countries have frozen about $120 million of assets belonging to Salameh.
Raja Salameh was arrested in in March in Lebanon and was released after a month on a record bail of 100 billion Lebanese pounds, or around $3.7 million at the market exchange rate. A month earlier, his brother the governor was summoned for questioning on his involvement in the affair - but he refused to appear three times. In June, the police raided his home and arrested him, but did not ring Salameh. When the security forces asked to conduct a search in the offices of the central bank, bank employees locked the doors and did not let enter the building – declaring a strike “in light of the actions of the security forces and prosecutors and the disrespect for the bank and its employees.”
At least for now, Salameh continues to run the bank and his legal defense at the same time, while Lebanon is hoping to obtain a loan from the International Monetary Fund of between $3 billion to $10 billion. But a central condition for approval of the loan is carrying out an in-depth investigation of the central bank’s actions and implementing economic and structural reforms of the Lebanese economy. The Lebanese government has twice invited outside investigations firms to examine the central bank’s operations – and twice these firms have withdrawn from the task because of a lack of cooperation on the part of the central bank and its governor. **Lebanese President Michel Aoun may have asked the law enforcement authorities to do their jobs and arrest and bring Salameh to justice, but Aoun also knows that if Salameh were to fall, the information he might very well reveal could damage Aoun too.**