Lebanon’s central bank governor Riad Salameh has been battling criticism since the country’s financial collapse in 2019. Yet the political class has systematically defended him, knowing that he knows all their financial secrets. In recent weeks, however, his situation has taken a turn for the worse, as prosecutors in France and Germany have indicted him and have asked Interpol to issue so-called “red notices” for his arrest.

Mr Salameh’s term as governor will end in July and he has already announced that he would not seek a renewal. Given his mounting legal problems – he has been accused of various crimes, including embezzlement and money laundering – that doesn’t seem to be much of a concession on his part, even if deep down he must realise that once he’s out of office, the politicians who had covered for him are far less likely to do so.

Indeed, the reaction of Lebanon’s judiciary to the French indictment of Mr Salameh was revealing. On May 24, Judge Imad Kabalan, who is considered close to some of Mr Salameh’s most powerful political backers, deprived the governor of his Lebanese and French passports, preventing him from travelling to France to face prosecution. Mr Kabalan also asked the French authorities to send him their file on Mr Salameh, presumably to try him in Lebanon.

The move had two impacts – one obvious, the second less so. By preventing Mr Salameh from leaving Lebanon, the move effectively protected him from foreign prosecution. That part was clear. However, in light of Mr Salameh’s remarks to an Arabic-language news channel in May that the judicial authorities were targeting him “because they were afraid of targeting the politicians”, it was also a way for the political class to keep him under their thumb. They worry that Mr Salameh might try to cut a deal with foreign judges at their expense.

Mr Salameh’s predicament must represent some sort of shock to Lebanon’s hopelessly corrupt politicians, who for the first time are seeing foreign countries or judicial authorities eyeing their accounts abroad with considerable suspicion. In November 2020, Gebran Bassil, the head of the Free Patriotic Movement, was sanctioned by the US Treasury’s Office of Foreign Assets Control “for his role in corruption in Lebanon”, under the so-called Global Magnitsky Act. It was the first designation under this act targeting an official in Lebanon.

While Mr Bassil saw the move as political, related to his ties with Hezbollah, the fact is that he could have been sanctioned under separate legislation for these. That he was sanctioned under the Magnitsky Act implied that he had been investigated by the Americans, and that they had built a solid corruption file on him to justify such action.

There are different types of weapons that foreign judicial authorities can use against the Lebanese political class and their allies in the financial community. They can play them off against each other, for one thing. In April, the French authorities indicted and questioned Lebanese banker Marwan Kheireddine on Riad Salameh and his brother Raja. He was later released, amid suspicions in Lebanon that he had given French prosecutors information on the Salamehs.

This is what worries Lebanon’s politicians most, namely that once the Omerta – or the wall of silence – is broken on their financial affairs, particularly by foreign prosecutors over whom they have no control, they will lose much of their support among the Lebanese. Given the fact that much of the population has seen banks illegally impose harsh restrictions on their accounts and transactions since October 2019, while the politically connected have continued to transfer vast amounts of money abroad, such fears are perfectly understandable.

A tell-tale sign of the population’s potential for resentment was visible just before the financial collapse, in October 2019, when the Lebanese rose up against the political class. In the southern city of Tyre, young men quickly attacked and burnt a beach club associated with the speaker of parliament, Nabih Berri, and his ex-wife. Such reactions cannot be ruled out again as impoverished Lebanese strike back against whom they perceive as highly corrupt leaders.

Legal cases in foreign jurisdictions have also played a role in challenging the banks’ thoroughly illegal capital control restrictions on their clients’ accounts. The banks’ conduct has not been legally justified by any law, primarily because politicians don’t want capital control restrictions that would prevent them from moving money outside of Lebanon. Yet what this has meant is that the banks are on shaky legal ground in imposing restrictions of their own, which is why clients have time and again won cases in court to recuperate their money.

For a political class and banks that have always manoeuvred in a legally grey Lebanese financial environment, the fact that they cannot predict how judicial authorities, mainly in Europe and the US, might act is alarming. This does not mean that corruption is about to end, or that politicians won’t find alternative places to park their ill-gotten gains.

But what it does mean is that western judicial authorities probably have access to quite a bit of financial information on Lebanon’s political and financial elite, as Riad Salameh’s tribulations show (he is being investigated in at least five European countries). That can translate into a lot of leverage if or when outside states decide to turn up the heat.