Lebanon’s embattled former central bank governor and a handful of close relatives and associates were on Thursday slapped with sanctions by the United States, United Kingdom and Canada over allegations of corruption, the U.S. Treasury Department said.
Riad Salameh, 73, ended his 30-year tenure on July 31 under a cloud of investigation and blame for his country's historic economic crisis.
France, Germany and Luxembourg are investigating Salameh and close associates over alleged financial crimes, including illicit enrichment and the laundering of $330 million. Paris and Berlin issued Interpol notices on Salameh in May, though Lebanon does not hand over its citizens to foreign countries.
"Salameh abused his position of power, likely in violation of Lebanese law, to enrich himself and his associates by funneling hundreds of millions of dollars through layered shell companies to invest in European real estate,” a U.S. Treasury Department statement said.
The statement said the U.S. coordinated the sanctions with the U.K. and Canada and that assets connected to Salameh would be frozen. The U.S. also sanctioned Salameh’s son Nady, brother Raja, close associate Marianne Hoayek and "former partner” Anna Kosakova. The U.K. sanctioned the same list of people except Nady Salameh, and Canada sanctioned only Salameh, his brother and Howayek.
Salameh has repeatedly denied allegations of corruption, embezzlement, and illicit enrichment. He insists that his wealth comes from inherited properties, investments and his previous job as an investment banker at Merrill Lynch.
U.S. officials said Salameh allegedly hid his identity through Panama shell companies and a trust in Luxembourg in a scheme where he purchased shares in a company his son Nady worked for as an investment adviser. He then sold those shares to a Lebanese bank regulated by the Central Bank, which the U.S. Treasury said was a conflict of interest and likely violated a Lebanese law that banned central bank employees from profiting from private businesses.
Raja has been accused of supporting his brother's embezzlement through a brokerage firm he owns called Forry Associates Ltd, which the U.S. Treasury described as a shell company based in the Virgin Islands.
Howayek, meanwhile, was accused of transferring hundreds of millions of dollars to the Salamehs from her bank account, which was "far more” than what could be accounted for with her central bank salary.
Nady Salameh was sanctioned as "the publicly registered officer” of companies registered in Luxembourg that purchased high-end real estate worth tens of millions of dollars through subsidiary companies in Belgium and Germany.
France-based Kosakova was accused of using funds funneled from Forry to purchase luxury properties in Paris, including apartments in high-end neighborhoods, and an office building on the touristic Champs-Elysées avenue for the central bank as a "continuity of operations” center.
Salameh is also being investigated in Lebanon. The Lebanese judiciary had taken his passports and imposed a travel ban soon after receiving the Interpol notices.
Salameh has criticized the European probe and said it was part of a media and political campaign to scapegoat him.
Once hailed as Lebanon’s guardian of financial stability, Salameh has been among the officials most blamed for policies that led to the country’s economic crisis, which has decimated the value of the Lebanese pound by around 90% against the U.S. dollar and sparked triple-digit inflation.
Lebanon has not appointed a new central bank governor, but a vice governor, Wassim Mansouri, has been named acting governor. The crisis-hit country has also been without a president for almost a year and is run by a caretaker Cabinet with limited functions.
"The only way to put Lebanon on the path to much-needed economic recovery is for its leaders to stamp out corruption and implement real reforms.” the U.K.’s minister of state for the Middle East, Lord Ahmad of Wimbledon, said in a statement from the Foreign, Commonwealth and Development Office announcing the sanctions.
A lawyer with French anti-corruption nongovernmental organization (NGO) Sherpa that filed a case against Salameh in France welcomed the sanctions, notably in the U.K. where they suspect most of Salameh's wealth is located.
"We believe it is a strong signal and hope that authorities from U.K. are ready to prompt investigations on the origin of investments and assets in the U.K.,” Chanez Mensous told the Associated Press (AP).
