The Financial Times dedicated a lengthy investigation today about the outgoing Governor of the Central Bank of Lebanon, Riad Salameh, under the title "Wizard Riad Salameh and the Looting of Lebanon." It revealed that the U.S. Attorney's Office for the Southern District of New York decided to open an investigation following U.S. sanctions against him. The report noted that after leaving the central bank, Salameh had sent "flash memory" abroad containing secrets about his work, anticipating potential misfortune.
The report indicated that "in June 2021, while Lebanon was suffering from a debilitating financial crisis, the central bank governor landed at Le Bourget Airport in Paris via private jet, where customs officials found him carrying large amounts of undeclared cash." Salameh, who also holds French citizenship, initially told border officers that he had only 15,000 euros. However, they searched his bags and instead found 84,430 euros and 7,710 dollars. When asked to explain the undeclared amounts, he simply stated he "forgot" the cash was in his bag, as police records show.
The Financial Times commented: "It seems that the public face of Lebanon's financial collapse may forget about 100,000 dollars when millions of Lebanese have been deprived of their life savings since the collapse of the banking system two years ago, illustrating the deep gap between his lifestyle and that of most in 2021. While Salameh lavishly spent on private jets and alleged paramours, the Lebanese saw the value of their savings plummet; civil servant salaries have now dropped to less than 100 dollars a month."
The report reviewed some of Salameh's biography: "Appointed in 1993, he helped build a rentier economy from the rubble of Lebanon's devastating civil war. He was praised for stabilizing the country during years of turmoil, and his close relationships with political and banking elites and powerful foreign patrons ensured very few questions about his unconventional financial tools. Salameh last left the bank in July, with a small group of supporters cheering for the 73-year-old. However, his reputation is now in tatters, with allegations that he helped lead the country towards ruin tarnishing his thirty-year service at the Bank of Lebanon. Since then, the financial system he helped shape has been likened to a Ponzi scheme, impoverishing three-quarters of the population while leaving its wealthy—himself included—largely unscathed."
The report continued: "Salameh has become the focus of judicial investigations in Lebanon, the United States, and seven European countries, all looking into allegations of financial crimes. Two of these countries have issued arrest warrants against him. On August 10, he was sanctioned by the United States, the United Kingdom, and Canada." The Financial Times disclosed that the U.S. Attorney's Office in the Southern District of New York has opened an investigation into Salameh's case. A spokesperson for SDNY declined to comment, stating, "His rise and fall reflect the state of his country, which has suffered for decades from arrogance, deceit, and corruption, and is now mired in what the World Bank has described as one of the worst economic depressions in the world, orchestrated by the country's elite that has long seized the state and lived on its economic rents."
Police Reports
The police report from Le Bourget is among a collection of documents reviewed by the Financial Times from European and Lebanese judicial investigations into allegations of Salameh's involvement in financial practices 'at the state's expense,' money laundering, and engaging in financial fraud and embezzlement of public funds. These include court reports, police records, financial statements, auditing reports, corporate balance sheets, real estate contracts, and witness testimony transcripts from those in Salameh's circle.
The Financial Times verified the documents' authenticity and, where possible, supplemented them with interviews with key figures. All provided a comprehensive insight into how he allegedly abused the powers of his office for personal gain, demonstrating a pattern of entangling his family in his financial affairs. The newspaper noted, "Along with his brother Raja, Salameh is accused of embezzling at least 330 million dollars from public funds, laundering it through a maze of offshore accounts linked to his family and alleged lovers, purchasing luxury properties from Munich to New York, and defrauding the central bank to rent overpriced office spaces in Paris from a company he owns." The documents also emphasize Salameh's extensive influence on the Lebanese banking sector, with investigators suggesting he colluded with commercial banks for mutual benefit through 'suspicious transactions,' interest-free loans, and 'arrangements to hide losses.' Investigators in Europe are also exploring the extent of banks' involvement in these schemes.
The newspaper recalled the U.S. Treasury's decision, when announcing sanctions against him, that a series of alleged crimes committed by Salameh "contributed to the rampant corruption in Lebanon and solidified the notion that the elites in Lebanon do not need to abide by the same rules that apply to all Lebanese." Salameh, who has long denied all allegations of misconduct, declined to comment to the Financial Times regarding the ongoing investigations, stating he "respects the law and the confidentiality of inquiries."
Financial Engineering
The newspaper reminisced: "Salameh took office in 1993, appointed by Lebanese Prime Minister Rafik Hariri after the war. Unlike his predecessors, Salameh came from the world of finance: he managed Hariri's portfolio while working as an investment banker at Merrill Lynch in Paris." The paper continued, "The two worked side by side to launch Lebanon's economic recovery after 15 years of devastating civil war. The financial system in Lebanon continued to rely mainly on foreign flows from Gulf countries and wealthy Lebanese nationals, exploiting banking secrecy laws. To keep borrowing costs bearable and fund Hariri's reconstruction plans, the duo pegged the Lebanese pound at 1,507 pounds to the dollar, where it remained until February. Three decades later, economists point to Salameh's decision to maintain the fixed exchange rate at all costs as the root of the current rot as the system became entirely reliant on incoming dollars."
Influence
The newspaper noted that Salameh's influence "grew among foreign patrons, bankers, and political elites. Senior banking sources and former employees of the Central Bank of Lebanon claim Salameh ran the bank like an emperor, and court documents allege he had 'absolute control' over its operations. He also benefited from bailouts and favorable lending terms to please politically connected bankers. The inflow of Gulf funds began to slow after years of instability, including the 2006 war between Hezbollah and Israel and the war in Syria. Salameh turned to what he called 'financial engineering': encouraging commercial banks to increase their dollar deposits in the Central Bank with interest rates as high as 12 percent, to bolster the hefty inventory of foreign reserves crucial for currency stability. In return, banks offered excessively high interest rates to their customers on multi-year deposits."
Transfers
It continued: "Lebanese banks converted most of their foreign currency liquidity from correspondent banks abroad into deposits at the Central Bank. During the years of civil war from 1975 to 1990, banks held about 90 percent of their reserves in liquid assets, according to economist Tawfiq Gaspard. By 2019, this had dropped to 7 percent. At that time, more than two-thirds of Lebanese banking deposits were invested with the state, according to Joann Shakir, an expert in Lebanon’s economic history, and the returns were abnormally high: annual payments on public debt made up over a third of total government spending each year, subsequently described by politicians and economists as a 'state-sponsored Ponzi scheme.'
Collapse
The newspaper pointed out that after 2019 "everything collapsed and had a devastating impact. After a decade of regional instability, there were no longer enough dollars to keep the system afloat. The pound plummeted to historic lows, and banks imposed punitive measures on customer withdrawals, encouraged by a sluggish and ill-fated government. GDP contracted by 40 percent and inflation currently consists of three-digit figures. Public anger focused on Salameh, with many Lebanese holding him personally responsible for wiping out their savings and allowing the banks to seize them."
Wealth
The newspaper highlighted: "Unlike most Lebanese, it appears Salameh's personal wealth has grown during the crisis. Earlier this year, Salameh told European investigators during his questioning that in 1993, his cash and property holdings were worth 60 million dollars, including 8 million dollars from inherited family land. He stated that his wealth is now 200 million dollars—meaning he would have tripled his actual wealth over 30 years. Salameh claimed this wealth accrued during his years as an investment banker and subsequent wise investments. However, a financial study commissioned by German investigators in 2022 concluded that Salameh could not have amassed his wealth solely from the funds he legitimately possessed before taking office as governor." Sources close to the investigations told the Financial Times that Salameh's wealth estimates are conservative, considering many assets are likely hidden in tax havens or obscured by Lebanese banking secrecy. One source stated, "We simply do not know what we do not know."
In 2020, Switzerland launched an investigation, followed by investigations in 2021 in Lebanon, France, Germany, and Luxembourg. Authorities in Monaco, Liechtenstein, Belgium, the United States, and the United Kingdom are also investigating Salameh's activities.
Forry Company
At the center of the Swiss investigation was an unknown company called Forry Associates. Founded in 2001 and registered in the British Virgin Islands, it is wholly owned by Raja Salameh, the governor's younger brother. European investigators allege that this company was the primary vehicle through which Salameh embezzled around 330 million dollars from the Central Bank of Lebanon between 2002 and 2016, funneling much of these funds into acquisitions of luxury real estate in European capitals, Lebanon, and New York. On April 6, 2002, Forry signed a brokerage contract with the Central Bank, allowing it to operate as an intermediary between the Central Bank and commercial banks for the purchase or sale of financial instruments such as Eurobonds, Treasury bonds, and certificates of deposit. Under this contract, signed by Riad Salameh and a company manager named Kevin Walter, Forry earned brokerage fees of up to 0.38 percent of the value of each transaction.
Furthermore, "BdL bank employees who met with European investigators last year stated they had no invoices or receipts related to Forry. Instead, Salameh informed the investigators that he handled those transactions himself, assigning a subordinate to execute the transfers to Forry's account. Commissions were paid directly from commercial banks to what Salameh referred to as the clearing account, and subsequently transferred to Forry's bank accounts in Switzerland. Salameh told investigators that the BdL employee dealing with the transfers would send him a letter detailing each transaction for his signature. Over two years into the investigation, the investigators have yet to prove that Forry engaged in any activities beyond receiving money from the central bank. They have not found a list of clients, employees, or Kevin Walter."
The Assessments continued: "In a 2022 search for Forry's headquarters in Beirut—which shared the same registered address as Raja Salameh's former office—there were no employees, no fixed phone line, and no stationery bearing Forry's name. The Financial Times' attempts to contact the company were unsuccessful. Raja Salameh did not respond to requests for comment but has previously denied any wrongdoing. Many banks that paid commissions to the Central Bank during the specified period told investigators they had never heard of Forry until its existence was revealed in the media and were unaware they were paying commissions on transactions involving financial instruments owned by Raja Salameh."
Lebanese Investigation
The newspaper continued: "Riad Salameh told Lebanese investigators that the Central Council of the Central Bank tasked him with signing a contract with Forry in 2001; however, former members of the Central Council told investigators this was not the case. Internal records from the Central Bank and testimonies indicate that the contract was never presented to subsequent council members, who said they were unaware of it. Riad Salameh insisted that Forry had a legal contract with the Central Bank and told investigators that he could not deduce any of the company's actions because he 'had no relationship with Forry.'
As part of his defense, Salameh hired a local auditing firm to prepare a report exonerating him. It found that no funds were sent from the Central Bank to the accounts of the governor or Forry. However, the head of the firm recently told investigators that the report was not comprehensive, as Salameh only provided excerpts for examination.
The report indicates, "In total, court documents show that Forry's account transferred over 248 million dollars to Raja Salameh's personal accounts at HSBC Switzerland in multiple currencies between 2002 and 2016. From there, at least 207 million dollars were traced to several of his accounts in five Lebanese banks." The funds ended up in bank accounts in Lebanon, France, Germany, Belgium, Cyprus, Switzerland, Liechtenstein, Luxembourg, Monaco, Singapore, the UK, Jersey, and the U.S. The French investigating judge wrote, "These transactions made it possible to hide the source of the embezzled funds."
Investigators indicate that funds linked to Forry were used to purchase properties in Paris and New York, as well as in the UK, Germany, Switzerland, and Belgium. Most of the real estate and banking accounts linked to Salameh in Europe were frozen in 2022 as part of a joint investigation led by France, Germany, and Luxembourg. Eurojust announced the seizure of around 120 million euros in assets, including bank accounts and real estate. U.S. authorities seized the two New York properties and their linked bank accounts on August 10.
European investigators are also examining several family members and close associates who allegedly assisted Riad Salameh in his scheme to defraud the Central Bank of Lebanon. French investigators focused on Anna Kusakova, a former Ukrainian friend of Salameh residing in Paris with whom he had a daughter in 2005, as well as Mariane Hawi, Salameh's aide at the Central Bank. French prosecutors have placed both women under formal investigation for criminal conspiracy and organized money laundering charges, with tax fraud charges leveled against Kusakova.
Kusakova is accused of aiding in the engineering of a scheme to lease offices for the Central Bank of Lebanon on one of the most expensive streets in Paris at prices much higher than market rates, with approximately 5 million euros going into her and Salameh's pockets. Investigators say she also received over 1.5 million dollars directly from Forry accounts "without economic justification." Kusakova’s lawyer told the Financial Times that she is contesting the indictment brought against her by French authorities. Hawi denied the charges against her in a hearing in Paris in June. She did not respond to the Financial Times’ request for comment.
Since his resignation last month, many wonder if the fugitive governor will face justice after thirty years at the heart of power. Salameh is widely believed to remain in Lebanon to avoid arrest and interrogation abroad. Salameh’s son has been drawn into the investigation. German prosecutors allege he transferred "money from the Central Bank of Lebanon" to real estate acquisitions, thereby concealing those funds "within Germany’s legal economic circle," as a judge in Munich wrote in a 2022 asset seizure order. When asked for comment, he said he has never been charged under any jurisdiction and claimed he is unaware of any public money being used in acquisitions in Germany.
Additionally, forensic audits have provided investigators with new leads, revealing 111.3 million dollars in "illicit commissions" paid by the Central Bank from 2015 to 2020, after the Forry scheme ended. A source close to the investigations suspects that Forry "is just the tip of the iceberg." On August 10, the U.S., the U.K., and Canada imposed sanctions on Salameh for engaging "in a variety of illegal self-enrichment schemes with the assistance of close family members and associates." The U.S. also sanctioned Raja, Hawi, and Kusakova.
