After 30 years spent at the head of the monetary authority.. Riad Salameh leaves the Central Bank of Lebanon with a collapsed lira and a torn economy
After 30 years at the helm of the monetary authority, Central Bank of Lebanon Governor Riad Salameh left his office before his term ends tomorrow, Monday, with a collapsed bill that he says he strived to maintain its stability, and with an economy torn apart by political conflicts and decades of corruption and mismanagement.
Salameh leaves the post he has held for 30 years on Monday, after gaining attention as a financial magician, whose legacy is tainted by the devastating collapse of the Lebanese banking sector and accusations of corruption at home and abroad.
Salameh was widely seen as the mainstay of the financial system until its collapse in 2019, and he saw his standing crumble, as the collapse impoverished many Lebanese and froze the deposits of most savers in the sprawling banking sector.
His image was further tarnished when one European country after another began to investigate whether he had abused his powers to embezzle wealth from Lebanese public funds. He denied any wrongdoing and told Reuters, days before his departure, that he had “worked according to the law and respected the legal rights of others” during his tenure.
(Anatolia)
Last May, French and German authorities issued warrants for his arrest. Interpol red notices declared him wanted by both countries. The law, issued at France’s request, cites charges including organized money laundering. The version issued at Germany’s request also cites the charge of money laundering.
The collapse in Lebanon came after decades of corruption and excessive government spending by the factions that control the government. Many Lebanese hold Salameh and those factions responsible for the collapse that led to the depreciation of the currency by 98%.
Salameh defended his tenure in an interview on Wednesday and said he had become a scapegoat for the collapse, stressing that the government – not the central bank – was responsible for spending public funds. “I will turn a page in my life,” Salama, 73, told LBCI.
His final months in office saw some officials calling for him to resign, while others remained silent. Asked if Lebanese politicians had washed their hands of it, Salameh told the TV station: “A long time ago.”
The central bank is ‘torn’
Salameh was a dramatic reversal of a man once seen as a potential president. After assuming the presidency of the Central Bank, Salameh built a solid reputation as a competent official in the financial system.
This image distinguishes him from the ruling politicians, many of whom were militia leaders from the 1975-1990 Lebanese Civil War, even though he enjoyed high-level support from them.
Salameh was also a regular participant in attractive financial conferences, enjoyed banking awards, and exercised broad powers as governor.
The financial system he oversaw provided many Lebanese with a standard of living that was incompatible with their unproductive economy. The savers enjoyed high interest rates and were able to convert their pounds into dollars at a fixed exchange rate that Salama maintained from 1997 until the collapse, before the structure collapsed and the depositors’ money was seized in the bank’s coffers so that they could only withdraw from it in small amounts and with very tight restrictions.
(AFP)
The confidence of depositors was buoyed by his calm demeanor and his mantra that their currency was in good shape, as was Lebanon, which weathered the global financial crisis in 2008. But public finances began to falter as dollar transfers slowed, putting increasing pressure on a system that required steady inflows of hard currency to keep it going.
He kept the system intact in 2016 by stealing dollars from local banks at high interest rates. Critics called this a “Ponzi scheme” because it relied on new borrowing to pay off existing debts.
The central bank has always said the operations were legal. In an interview on Wednesday, Salameh rejected the notion that the Banque du Liban was running a “Ponzi scheme.”
As the dollar dried up, most savers were frozen from accessing their foreign-currency deposits, or forced to make withdrawals in local currency at exchange rates that wiped out most of their value.
In the context, Nasser Al-Saidi, the former Minister of Economy and Deputy Governor of the Central Bank, said, “He leaves behind a shattered institution that will have to be restructured in light of losses of about $76 billion at the Banque du Liban.”
Defending its record on Wednesday, Salameh said the central bank had contributed to “establishing economic stability and development” during the 27 years of its tenure.
Caveats
The graffiti protecting the headquarters of the Banque du Liban reflects the anger of many towards Salameh.
(AFP)
The corruption investigations focus on the commissions that the central bank charged banks for buying government securities, the proceeds of which went to Forry Associates, a company controlled by his brother Raja Salameh.
The Brothers have denied Salameh transferring or laundering public funds and denying any wrongdoing. “No money from the central bank went directly or indirectly to Fawry,” Salameh said in an interview on Wednesday.
As part of its investigation, the French judicial authority summoned Salama Raja’s brother and assistant governor Marian Hoayek. Al-Huwaik’s lawyer did not respond to Reuters’ request for comment. But Salameh previously told Reuters that his lawyers had filed legal challenges to the arrest warrants in France and Germany.
Salameh and his brother Rajaa Walhoek were charged in Lebanon with money laundering, embezzlement and illicit enrichment in February. But critics have long questioned how seriously the case should be pursued in Lebanon, as politicians can influence the judiciary. The independence of the judiciary is enshrined in the constitution, yet even Lebanon’s chief judge complained about interference last year.
(Reuters, The New Arab)
2023-07-30 14:00:10
#Riad #Salameh #leaves #Central #Bank #Lebanon #collapsed #lira #torn #economy
