Riad Salameh, the former head of Lebanon’s central bank, was detained for suspected financial offenses

According to three judicial sources, Riad Salameh, the former governor of the central bank of Lebanon, was apprehended in Beirut on Tuesday due to allegations of financial crimes associated with a brokerage company. This was his initial detention following years of allegations both domestically and internationally.

Salameh, who served as the bank governor for 30 years, was beset by allegations of financial crimes, including the illicit enrichment of public funds, by authorities in Lebanon and several Western countries during his final years.

The former central bank chief was accused of accumulating over $110 million through financial offenses involving Optimum Invest, a Lebanese firm that provides income brokerage services, according to two judicial sources who spoke with Reuters.

As part of commissions earned through the central bank’s dealings with Optimum between 2015-2018, one source claimed that the specific charges that resulted in his detention on Tuesday were embezzlement, money-laundering, and fraud.

Requests for comment were not promptly addressed by either Salameh or his attorney. Salameh has previously denied any allegations of financial offenses.

Another judicial source stated that he will be detained for four days as a “precautionary arrest” before the case is transferred to the Beirut public prosecutor.

Optimum’s CEO, Reine Abboud, informed Reuters via telephone that the company was not present at the hearing and had learned of the arrest from local media.

Abboud directed Reuters to a statement on Optimum’s website that stated that a financial audit conducted in late 2023 had revealed “no evidence of wrongdoing or illegality” in the company’s interactions with the central bank.

The charges filed on Tuesday are distinct from those that were previously filed in connection with Forry Associates, a company that is under the control of Salameh’s brother, Raja. The brothers, who deny any malfeasance, were accused of diverting $330 million in public funds through commissions by utilizing Forry.

Salameh had never been apprehended before, despite the fact that he was the subject of accusations in Lebanon, had arrest warrants in both France and Germany, and was the subject of an Interpol Red Notice.

In a system that detractors contend has long protected the elite, the prosecution of a prominent figure by Lebanese authorities would be a rare occurrence if the case persists.

The government would not intervene in the matter, according to Caretaker Prime Minister Najib Mikati, in an interview with pan-Arab broadcaster Al-Hadath.

Throughout his tenure, Salameh maintained a close relationship with Lebanon’s most prominent politicians. This caused critics to question whether the Lebanese judiciary, which is heavily reliant on political support for appointment, would conduct a thorough investigation into him.

UNDER SANCTIONS

Salameh was apprehended subsequent to a hearing at Lebanon’s justice palace regarding the central bank’s interactions with Optimum Invest, according to two of the judicial sources who spoke with Reuters.

They claimed that Optimum had engaged in transactions with Lebanon’s central bank to purchase and sell treasury bonds and certificates of deposit with rapid rotations in order to generate substantial profits.

Henry Khoury, the interim justice minister of Lebanon, informed Reuters that he was unaware of the file’s specifics.

“There is no doubt that the Public Prosecutor did what was required of him and interrogated former governor Riad Salameh,” according to him.

Salameh earned a reputation as a capable administrator of the financial system after assuming the role of central bank director following a 15-year civil conflict. He was once considered a potential candidate for the presidency.

The United States, Britain, and Canada announced sanctions against him after he departed office, accusing him of corrupt actions to enrich himself and his associates. He also denied these allegations at the time.

His decline is comparable to that of Lebanon’s financial system, which imploded five years ago and is currently undergoing an evaluation by a financial watchdog in the upcoming weeks. This evaluation could potentially result in the system being added to a “grey list,” necessitating further examination.

The Financial Action Task Force identified an absence of judicial action on alleged financial crimes as one of the primary gap areas.

Salameh’s detention was perceived by a diplomatic and judicial source as a potential attempt to demonstrate to FATF appraisers that action was being taken.