“International Arrest Warrant Issued for Central Bank Governor of Lebanon, Riad Salameh, Amidst Financial Crisis and Money Laundering Investigations”

Since the end of 2019, Salameh has turned into one of the most prominent people to blame for the financial crisis that Lebanon is going through, as he found himself at the center of Lebanese and European judicial investigations on several financial charges.

Salameh was subjected to careful and focused interrogation in Beirut in March 2023, by European judges and under the supervision of the Lebanese judiciary, where hundreds of questions were directed to him, most of which focused on money laundering operations in European banks.

Three types of pursuits

The types of prosecutions against the Governor of the Central Bank of Lebanon differ, as the first type is related to prosecutions about his direct responsibility for the financial collapse in Lebanon, while the second type is related to investigations outside Lebanon, regarding illegal enrichment and embezzlement of funds through the brokerage company “Fore Associates” owned by Raja Salameh, who is Brother of the Governor of the Banque du Liban, while the third type is linked to accusations of money laundering, the accumulation of great wealth in Europe, specifically in France, and the purchase of luxury real estate by abusing his power.

Riad Salameh was appointed as governor of the Central Bank of Lebanon on the first of August 1993 for a period of 6 years, and he was re-appointed for four consecutive terms in the years 1999, 2005, 2011 and 2017, and in July 2023 he will end a reign that lasted for 30 years.

How did Salama collect his wealth?

Salameh insists that he accumulated his wealth from his previous work for two decades at the global financial institution “Merrill Lynch”, and from investments in several fields, apart from his work at the head of the Banque du Liban.

Salama had revealed at the beginning of 2022 that the size of his personal wealth amounted to about $150 million, indicating that he had benefited from investment advice and bank loans to buy a luxury property, stressing that he did not see a crime in that.

Fears of banning correspondent banks

However, the French judiciary issued an international arrest warrant against Salameh, which shuffled the papers related to this file, amid fears that this note would push correspondent banks to refrain from making any transfers or financial transactions with the Central Bank of Lebanon, which necessitates his immediate resignation.

The French arrest warrant relates to “money laundering” cases obtained on French territory, as, according to “Agence France Presse”, French investigators suspect that Salameh accumulated real estate and banking assets, through a complex fraudulent financial scheme, and misused Lebanese public funds on a large scale, during He took over the management of the Banque du Liban for three decades.

Riad Salameh responded, through a press statement, to the arrest warrant issued by the French judiciary, by affirming that he will challenge this decision, which constitutes a violation of the laws, indicating that the French investigation struck a fundamental principle related to the confidentiality of investigations, which was evident through the press agencies obtaining documents. Confidential Investigation These agencies also know in advance the intentions of investigators and judges.

Not properly notified

For his part, Deputy Governor of the Banque du Liban, Attorney Pierre-Olivier Sur, said that Salameh’s absence from the investigation session on May 16, 2023, is due to his failure to inform him of the obligation to appear before the French judiciary in accordance with the rules, and this matter was confirmed by the Lebanese judiciary, which announced that the authorities failed to inform Salameh of the summons. .

A senior Lebanese legal source said in an interview with “Sky News Arabia Economy” that Lebanon has the right not to extradite the governor of the Banque du Liban to the French authorities, and the Lebanese judiciary has previously faced similar cases and taken decisions regarding them, indicating that the expected scenario will occur after circulating the name of the Central Bank of Lebanon. Riad Salameh, as wanted by Interpol at the world level, is for Salameh to step down from his position at the request of the Lebanese authorities, after which the Lebanese judicial authorities announce that they will try Salameh on their territory after confiscating his passport and preventing him from traveling.

According to the legal source, the second scenario may be by forcing the Governor of the Banque du Liban to step down from his position, by arresting him by the Lebanese judiciary, with a refusal to hand him over to the French judiciary, which is the least feasible scenario and during which the first deputy governor takes over the safety position until a new ruler is chosen. As for the third scenario It is the continuation of Salameh in his position until the end of his term at the end of June and the beginning of July 2023, as this coincides with his being subject to investigations conducted by the Lebanese judiciary, considering that this scenario will have dangerous repercussions, given that the head of the Lebanese financial system has become the subject of international suspicion related to embezzlement, forgery and money laundering. .

Market prior knowledge of the arrest warrant

For his part, banking advisor Bahij Al-Khatib said, in an interview with the “Sky News Arabia” website, that the Lebanese market was in the picture of what will happen yesterday, as the news of the issuance of a French arrest warrant against the Governor of the Banque du Liban was leaked, about two weeks ago, and therefore we saw stability. On the monetary, financial and banking level in the country after the memorandum was issued, while the exchange rate of the US dollar against the Lebanese pound maintained its stability as well, at the level of 94 thousand pounds per dollar, and from here it can be confirmed that the local market absorbed the shock without recording any rebounds.

Al-Khatib adds that there is a high possibility that the international arrest warrant will push correspondent banks to stop dealing with Lebanon, which will have great repercussions, especially since Lebanon’s economy has become “dollarized”, and therefore any step in this direction may isolate Lebanon from the system. The global financial, which is something that no one can bear its consequences, indicating that the coming hours or days will be decisive regarding the choice that the Governor of the Banque du Liban, or even the Lebanese authorities, will resort to, with a low possibility that the Lebanese government will appoint a new governor for the Banque du Liban.

Undermining confidence and pressure on the lira

For his part, the head of the Lebanese Institute for Market Studies, Patrick Mardini, said, in an interview with “Sky News Arabia Economy”, that the French arrest warrant will shake confidence in the Lebanese financial sector, which will lead to more pressure on the Lebanese pound, and will make it difficult for the Central Bank to intervene in the market. Pointing out that the mandate of the Governor of the Banque du Liban ends after about two and a half months from now, and therefore the issue of whether or not he steps down is not an important matter, since he will eventually leave.

Mardini believes that the research should currently focus on the characteristics of the new governor of the Banque du Liban, who must inspire credibility, in order to ensure the restoration of confidence in the Lebanese pound and the Lebanese banking system, noting that anyone should come after Governor Salameh, whether he is a new ruler or one of his deputies. Therefore, he must abide by stopping the printing of the lira, and not disposing of the foreign currency reserves in the country.