Lebanon’s central bank chief vows legal action over report of US sanctions
SALAMEH THREATENS LAWSUIT AGAINST BLOOMBERG FOR ‘FABRICATED NEWS’
State Department denies Bloomberg story on Salameh, whose role in nation’s financial turmoil has come under fresh scrutiny
The US yesterday denied that it was considering imposing sanctions on Lebanon’s veteran central bank governor Riad Salameh, whose role in the country’s financial turmoil has come under fresh scrutiny.
“We have seen reports about possible sanctions on Riad Salameh. They are untrue,” a US State Department spokesperson told Reuters.
Bloomberg reported on Thursday that the US was weighing sanctions against him amid a wider investigation into the alleged embezzlement of public funds. Salameh said yesterday that he would file lawsuits against Bloomberg and its correspondent in Beirut for what he called “fabricated news”.
Fall from grace
A former Merrill Lynch banker, Salameh has led Lebanon’s central bank since 1993. But the collapse of the financial system has shattered his reputation. Swiss investigators are looking into allegations of money laundering and embezzlement tied to Lebanon’s central bank, though they have not said whether Salameh is a suspect.
The central bank governor became a focus of anger during protests against the ruling elite as the crisis erupted in late 2019. Banks have since locked depositors out of their savings as the currency crashed, making at least half the population poor.
The Bloomberg report based on four anonymous sources said that officials within the Biden administration have discussed the possibility of coordinated measures with their European counterparts targeting Salameh.
Freezing overseas assets
The discussion has so far focused on the possibility of freezing Salameh’s overseas assets and enacting measures that would curtail his ability to do business abroad, the sources said. Deliberations are ongoing and a final decision over whether to take action may not be imminent, they added.
US authorities have considered penalising Salameh before. The possibility emerged as recently as last year, but thenpresident Donald Trump wasn’t interested in taking action, two of the sources said.
“The US supports the Lebanese people and their continued calls for accountability and the reforms needed to realise economic opportunity, better governance and an end to the endemic corruption,” US State Department spokesman Ned Price said in a press briefing on Thursday, adding that “I wouldn’t want to preview or speak to any potential policy responses at this time.”
What the Swiss are probing
Salameh, 70, was once celebrated as the financier who stabilised Lebanon’s currency against all odds and was even considered at one time to be a presidential contender.
Swiss authorities are looking into allegations that Salameh indirectly benefited from the sale of Lebanese Eurobonds held in the central bank’s portfolio between 2002 and 2016, according to a Lebanese judicial official and a person familiar with the Swiss investigation.
Brother’s commissions
Also of interest to authorities is the relationship between Salameh’s brother, Raja, and the brokerage firm Forry Associates, which charged commissions on the sale of Eurobonds to investors. The commissions under scrutiny reportedly total more than $300 million.
The Beirut-based investigative news website Daraj previously reported on the link between Salameh’s brother and Forry. The firm was registered in 2001 in the British Virgin Islands, an offshore tax haven, and administered by Mossack Fonseca, the Panamanian agent exposed in the 2016 Panama Papers leak. Forry was struck off in 2011, according to data from the leak.
As early as 2007, the then US Ambassador to Lebanon Jeffrey Feltman raised concerns in Washington over the financial relationship between the Salameh brothers and the central bank.