In a major development in Lebanon’s ongoing battle against financial corruption, Riad Salameh, the country’s former central bank governor, was arrested in Beirut on Tuesday. The arrest, which comes after years of accusations against Salameh, is linked to financial crimes allegedly committed through a brokerage company.
Salameh, 73, served as the governor of the central bank for three decades. However, his final years were marred by accusations of financial misconduct, including illicit enrichment through public funds, by authorities in Lebanon and several other countries. The specific charges that led to his arrest on Tuesday include embezzlement, money-laundering, and fraud related to commissions earned through the central bank’s dealings with Optimum Invest. This Lebanese firm provides income brokerage services and was involved in transactions with the central bank between 2015 and 2018.
Neither Salameh, his lawyer, nor Optimum has responded to requests for comment. It’s important to note that Salameh has consistently denied any accusations of financial wrongdoing in the past. Tuesday’s arrest is separate from previous charges against him linked to Forry Associates, a company controlled by Salameh’s brother, Raja. The brothers were accused of diverting $330 million in public funds through commissions using Forry.
Despite facing charges in Lebanon, arrest warrants in France and Germany, and an Interpol Red Notice, Salameh had never been apprehended. However, he will now be held for four days as a “precautionary arrest” before the case is transferred to the Beirut public prosecutor.
Two judicial sources revealed that Salameh’s arrest followed a hearing at Lebanon’s justice palace concerning the central bank’s dealings with Optimum Invest. According to these sources, Optimum was involved in buying and selling treasury bonds and certificates of deposit with quick turnovers to generate substantial profits for the central bank.
Reine Abboud, CEO of Optimum, confirmed that the company had not been present at the hearing and only learned about the arrest through local media. She referred to a statement on Optimum’s website that claims a recent financial audit found “no evidence of wrongdoing or illegality” in the company’s dealings with the central bank.
Lebanon’s caretaker justice minister, Henry Khoury, stated that he lacked specifics about the case. However, he confirmed that the Public Prosecutor had interrogated Salameh, fulfilling his duty. Similarly, caretaker prime minister Najib Mikati declared that the government will not interfere with the ongoing legal proceedings.
Salameh’s arrest marks a significant turning point for a man who once enjoyed the backing of Lebanon’s top politicians and was even considered a potential presidential candidate. After taking the helm of the central bank following the devastating 15-year civil war, he earned a reputation as a capable manager of the financial system.
However, Salameh’s fall mirrors the decline of Lebanon’s financial system. The country has been grappling with an economic meltdown for five years, and a financial watchdog will soon be conducting an appraisal that could potentially place Lebanon on a “grey list”, subjecting it to additional scrutiny. One of the key areas identified by the Financial Action Task Force is the lack of legal action against alleged financial crimes.
Diplomatic and judicial sources view Salameh’s arrest as a possible attempt to demonstrate to the FATF appraisers that Lebanon is taking action against financial corruption. The arrest could potentially help Lebanon avoid being placed on the ‘grey list’, which could have significant negative consequences for its economy.
