On Tuesday September 3, Cassation Prosecutor, Jamal Hajjar, issued an arrest warrant (pending investigation) against former Central Bank (BDL) Governor, Riad Salameh. The warrant is related to the notorious Optimum case, with suspicions of embezzling funds from BDL.
Salameh is also connected to a series of other scandals other than the Optimum case, such as the Forry scandal which involves Salameh’s brother, Raja, bank loans and money smuggling cases, the falsification of BDL balance sheets, the notorious financial engineering schemes, and the Paris office scandal.
Internal Security Forces (ISF) were seen transporting Salameh from the Court of Justice to one of the ISF’s detention centers. Currently, Salameh remains detained and unauthorized from traveling (the Public Prosecution Office had already confiscated his passports before the recent warrant for other matters).
To the shock (and celebration) of many, the arrest came at a time where all sorts of accountability and justice on the level of Lebanon’s political system remain absent. As such, the arrest warrant raises numerous questions regarding the background of Hajjar’s decision.
Did the Political Class Abandon Salameh?
Many have considered the absence of political intervention in the judiciary’s decision to be a sign that the political class is using Salameh as a scapegoat, further absolving itself from the responsibilities of the financial crash and the fact that it is the political class itself that allowed for the constant renewals of Salameh’s mandate.
In Lebanon, politicians, policymakers and prominent figures of authority do not present themselves to the judiciary unless they have secured sufficient political backing to prevent a fair trial and subsequent punishment. As the political class has long backed Salameh, Hajjar’s decision comes as a significant surprise.
However, analysts have also pointed out that Salameh, being head of BDL, also possesses a wide array of financial secrets related to the class of politico-financial elites, which puts him in a unique position to reveal such secrets and potentially put a number of prominent figures in an awkward position.
Hajjar has now referred Salameh to the Public Financial Prosecution Office, headed by Judge Ali Ibrahim, who in turn charged Salameh with embezzlement, stealing public funds, forgery and illicit enrichment.
Ibrahim, Berri and Conflict of Interests
Ibrahim is known to be affiliated to the Speaker of Parliament, Nabih Berri, which could only mean that Berri approved of such a decision. This could either mean that Berri has decided to drop Salameh, or that Salameh would benefit from such a decision, according to journalist Timour Azhari.
Ibrahim, in his turn, has referred Salameh to Beirut First Investigating Judge, Bilal Halawi, who has the options to either issue an arrest warrant against Salameh or keep him in custody after questioning.
Interestingly, however, a Megaphone report highlights that Ibrahim himself is in the special investigation committee that is chaired by Salameh, which has the role of investigating financial crimes and can lift Lebanon’s notorious banking secrecy law. What this means is that Ibrahim could also be held accountable for failure to investigate Salameh’s financial crimes, and that produces a conflict of interest.
What is confirmed so far is that Salameh is to remain in detention at least for the near future, until a hearing is scheduled, according to news source Reuters.
A Snowball of Accountability
On one hand, Salameh’s arrest could mean the political class’s abandonment of him and his usage as scapegoat. On the other hand, Salameh’s arrest could potentially mean a snowball of accountability processes against other prominent politico-financial figures, given Salameh’s central position overseeing their financial dealings.
However, the current governance of BDL is not free from transparency-related question marks either. Recently, Fitch Ratings withdrew Lebanon from its ratings due to a lack of data shared by BDL, the Ministry of Finance and other financial institutions.
Even during Lebanon’s years of civil war and numerous conflicts, data was at least being shared periodically. Today, the schemes of major financial institutions remain largely unknown to the public.
One of these schemes is the recent strategy to funnel funds meant for state expenditure towards BDL in order to maintain currency stability. Such a strategy is bound to siphon funds off necessary state expenditure (and, in turn, vital sectors) and produce another monetary-economic collapse in the near future.
As matters stand, Lebanon remains far from possessing adequate and effective accountability and transparency mechanisms at the level of financial institutions, and the political system overall, to ensure those behind the country’s woes are held accountable.