Lebanon judge extends former central bank governor detention amid ongoing embezzlement case News
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Lebanon judge extends former central bank governor detention amid ongoing embezzlement case

The first investigative judge in Beirut, Lebanon, ruled on Monday that the former governor of Lebanon’s central bank (BDL), Riad Salameh, will remain in detention as investigations into corruption charges continue, local media reported. The judge issued an arrest warrant against Riad Salameh after his interrogation session concluded.

Riad Salameh was the head of Lebanon’s central bank for 30 years. He was arrested on September 3 in the capital Beirut for embezzlement of over $40 million of BDL funds. The embezzlement allegedly occurred during transactions between the ex-governor and the brokerage company Optimum Invest.

According to an investigative report, Salameh used the company Optimum Invest’s account at the Central Bank of Lebanon to achieve personal profits and hide illegal operations in it. The investigation extends to an arranged transfer between Salameh and two attorneys of $42 million from the central bank through other accounts to eventually reach the former governor’s account.

In addition to embezzlement of public funds, the ex-governor of the BDL is also accused of robbery of government assets, falsifying records and fraud.

Riad Salameh is considered to be the responsible party for Lebanon’s 2019 financial collapse and the resultant ongoing economic crisis through the orchestration of a Ponzi scheme. The economic crisis had seen hyperinflation, a decrease in spending power, a depreciation of the local currency and the collapse of the banking system. Millions of Lebanese citizens have lost their life savings deposited in insolvent banks.

A Ponzi sheme is a fraudulent investment program that involves using payments collected from new investors to pay off earlier investors. The organizer of a Ponzi scheme usually promises to invest the money he collects to generate supernormal profits with little to no risk. In reality, the fraudster doesn’t invest the money, but focuses on attracting more investors to keep the funds flowing as there is no business activity or investment that generates revenue.

Riad Salameh has been involved in several financial crimes in countries outside Lebanon, with Interpol issuing a red notice against him. Additionally, Canada, the UK and the US imposed sanctions against him for corruption and personal enrichment.

Riad Salameh’s corruption charges and trial come at a critical moment for Lebanon as the country is currently facing the risk of being placed on the “grey list” of the Financial Action Task Force (FATF). This list contains countries whose jurisdictions are placed under enhanced surveillance to ensure their commitment to addressing deficiencies in their anti-money laundering and financing of terrorism measures.

Many Lebanese applauded the arrest of Riad Salameh and supported a trial to hold him accountable for the country’s economic meltdown. Nevertheless, local journalists reported that alleged irregularities might have occurred during Monday’s session. They revealed that the head of the Litigation Authority at the Ministry of Justice was not allowed to attend the interrogation session.

A second interrogation session to complete the investigation with the former governor of the central bank of Lebanon will take place next Thursday.

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