Riad salameh news

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“The authorities have not done anything … they don’t want to,” he says.

Saidi also says he “sees no appetite in the political class for reforms”.

The former minister, who once returned to Lebanon to rebuild because he “believed in the future”, doesn’t think people will come back this time.

“Unless you have a change in the rules of the game, political reform, banking sector reform, economic reforms, why would they come back?”

Lebanon’s former central bank chief Riad Salameh arrested

Lebanon’s former central bank governor, Riad Salameh, has been arrested after a hearing at the country’s judicial palace, according to Lebanese state media.

The state-run National News Agency (NNA) said Judge Jamal al-Hajjar, who holds the position of public prosecutor, detained 73-year-old Salameh after interrogating him on Tuesday.

Is Lebanon’s new central bank governor ‘another Riad Salameh’?

Beirut, Lebanon – Lebanon’s council of ministers has elected Karim Souaid as central bank governor – a candidate backed by the country’s bank lobby and a businessman who many say is emblematic of the malaise Lebanon is suffering.

Just out of a brutal war with Israel, Lebanon is in dire need of reconstruction and recovery money.

He has said he will appeal the Interpol notices.

In the last weeks, Salameh has appeared before the courts but few Lebanese believe this will result in any answers, given Lebanon’s highly politicised judiciary.

One of the investigating judges, Ghada Aoun, was accused of bias and dismissed from the case in May shortly after charging Salameh.

“They’re punishing me for doing my job,” she told reporters at the time.

According to the Lebanese prosecutor general, Salameh is suspected of transferring illicit funds from BDL to Lebanese actress Stephanie Saliba, who has also been charged. As this pressure increased, so too did the battle over who would lead Lebanon’s central bank since this figure will deeply affect Lebanon’s economic and banking agenda over the coming years.

The banks’ side, which supports Souaid, has been spearheaded by Antoun Sehnaoui, the chairman of the board of the SGBL Group.

Sehnaoui also funds Lebanese media outlets and is believed to be close to many politicians.

So you have this combination of support of the major beneficiaries and that’s why he remained in power for so long,” he adds.

But recently, Salameh was charged with money laundering, fraud and embezzlement to the tune of $330m in Lebanon and abroad.

He had also been charged in Lebanon with illicit enrichment. This is the side supporting Souaid.

Souaid’s ideas for the state are thought to be outlined in a 2023 paper, financed by his investment firm, that recommends haircuts of up to 90 percent, which would fall on depositors.

Critics say this would allow bankers and the politicians who backed and profited from them to escape accountability.

“It would basically incentivise them to take the same behaviour [that caused the economic and banking crisis] with the same risks,” Walid Marrouch, an economics professor at the Lebanese American University, said.

The pro-reform side, which includes the Depositors Union, says piling the losses on the state will bankrupt it and hurt citizens who did nothing wrong, so the commercial banks should foot the losses to repay depositors.

These reforms would hit bank owners the hardest, forcing some banks to merge or close entirely.

At an emergency news conference called by the Depositors’ Union on Wednesday to oppose Souaid’s selection, Halime Kaakour, one of 13 Lebanese MPs elected in 2022 on a post-revolution sentiment demanding reform, stated: “We will hold each minister accountable who nominates a central bank governor that will burden the state with $76bn in losses.”

The $76bn figure is an estimate, as the exact figure is unknown.

Since 2019, Lebanon has suffered through one of modern history’s worst economic crises. State services have been battered, including the electricity sector, leaving those who can afford the cost to rely on private generators.

‘Another Riad Salame’

Two camps had emerged in response to Souaid’s candidacy.

On one side were the banks, banking lobby, most of the significant traditional parties – including ideological adversaries like Hezbollah and the Lebanese Forces – and President Joseph Aoun, whose economic adviser, Varouj Nerguizian, is a board member of Souaid’s investment firm.

On the other side were some reformist ministers, independent MPs, reform-minded NGOs, and sceptics, including Prime Minister Nawaf Salam.

After Souaid was voted in, Salam delivered a speech admitting he and other ministers had reservations about the new appointment.

“Any governor must abide by the financial policy of our reformist government as expressed by the ministerial statement [that includes] a new programme with the International Monetary Fund, restructuring banks, and devising a complete plan according to the best international standards to preserve depositors’ rights,” Salam said.

Souaid has yet to comment on what his plan for the central bank would be.

But those opposed to Souaid say he is too close to power and his policies overwhelmingly favour the banking lobby.

We respect the judiciary’s decision,” caretaker Justice Minister Judge Henry Khoury said.

Caretaker Prime Minister Najib Mikati told pan-Arab broadcaster Al-Hadath that the government will not intervene in the case.

In addition, Salameh been charged with forgery, money laundering and tax evasion.

He is being investigated for embezzlement by prosecutors in Belgium, France, Germany, Liechtenstein, Luxembourg, and Switzerland.

Former Prime Minister Najib Mikati’s son Maher is also a board member of Souaid’s investment firm.

“They’re trying to bring in another Riad Salameh,” said Mohammad Farida, economic adviser for the Depositors Union, an NGO that argues that banks and not depositors should be held accountable for the 2019 financial crisis.

Salameh is the former central bank governor who was arrested in September for financial crimes in Lebanon and is the subject of numerous financial investigations in five different European countries.

Every minister will be ‘held accountable’

Lebanon is entering the sixth year of a devastating economic crisis and badly needs relief funds from the IMF, which has laid out several reforms Lebanon needs to apply to receive those funds.

A parallel battle for accountability for the tens of billions in economic losses has been at an impasse for five years as the political class, backed by the banking lobby, focused on scuttling any effort at passing reforms the IMF deems critical to unlock $3bn in relief funds.

The fight essentially comes down to who should bear responsibility for the 2019 economic collapse and bear the losses.

The pro-banker side believes the state is primarily responsible for the collapse after defaulting on eurobonds.

The inquiry looks into whether Salameh used his brother’s brokerage firm, Forry Associates Ltd, to charge hidden commissions on BDL’s dealings which were then invested in real estate across Europe.

In May, Interpol issued two separate red notices against Salameh at the request of France and Germany.

French prosecutors charged him with “criminal association with a view to commit offenses”, organised money laundering, and “aggravated tax fraud”, while Germany is charging him with “jointly committed money laundering, money laundering on a repetitive and gainful basis”, according to Interpol’s website.

But Salameh remained in power, despite calls to remove him.

Prime Minister Najib Mikati was suspected of protecting Salameh for his own political interests, angering the Lebanese people further.

Salameh had harnessed enough power and support to become quasi-untouchable.

He insists that his wealth comes from inherited properties, investments and his previous job as an investment banker at Merrill Lynch.

Salameh was questioned on Tuesday by al-Hajjar for over three hours, the Associated Press news agency reported, citing three judicial officials who spoke on condition of anonymity because they were not authorised to discuss the case with the media.

Salameh was interrogated over several financial matters, including a case in which he allegedly hired a company called Optimum to manipulate financial statements and conceal Lebanon’s haemorrhaging financial losses.

Two judicial sources told the Reuters news agency that the former central bank chief was accused of accruing more than $110m via financial crimes involving Optimum Invest, a Lebanese firm that offers income brokerage services.

One source said the specific charges that led to his arrest on Tuesday were embezzlement, money-laundering and fraud as part of commissions earned through the central bank’s dealings with Optimum between 2015-2018.

The officials said that Lebanon’s Internal Security Forces transferred Salameh to a more secure prison but did not disclose further details.

Protests against the country’s sectarian system led to violent clashes between factions and the instability was worsened by civil war breaking out in neighbouring Syria.

But the solution was derailed by political deadlock, and depositors suffered.

As banks locked down and citizens were unable to withdraw their money, the exchange rate devalued by more than 95 percent. Before the crisis, the lira stood at 1,500 to the US dollar – today, $1 is equal to 89,000 lira.

With many of the country’s former middle class thrust into poverty, some citizens were forced to hold up banks to withdraw their money.

After the vast destruction caused by Israel’s latest war on Lebanon, the need for reconstruction money is increasingly pressing.

Lebanon does not extradite its citizens.

He was accused by many in Lebanon of being responsible for the country’s financial crisis since late 2019.

Salameh has repeatedly denied allegations of corruption, embezzlement and illicit enrichment. Aoun is involved in several other corruption cases involving major banks and even PM Mikati.