Monaco's Money Laundering Probe of Najib Mikati Goes On After Lebanon Drops Own Case

Monaco is continuing its investigation into Lebanon's billionaire caretaker Prime Minister Najib Mikati over allegations of money laundering, the principality's general prosecutor has confirmed exclusively to The National.

This will proceed despite the Lebanese judiciary dropping its own separate probe into allegations of fraud connected with a subsidised housing loans scheme that was alleged to involve members of the Mikati family.

“An investigation is currently ongoing in the principality of Monaco and it has been entrusted to the judicial police division of the Public Security,” the Monaco General Prosecutor’s Office said.

Officials could not provide further information “at this stage”, the office said.

Monaco requested mutual legal assistance in January last year from Lebanese authorities in its investigation into Mr Mikati and his relatives over allegations of money laundering in relation to the subsidised loans.

Mr Mikati is connected to three companies in Monaco, including Sam M1 management, and had, according to the request, several bank accounts in the principality — which have been closed.

Lebanon opened its own investigation into the housing loans case in 2019, after allegations that politicians and affluent individuals benefitted from fraudulent central bank-subsidised loans.

According to the allegations, these included members of the Mikati family.

The file stayed for two years with Beirut's First Investigative Judge Charbel Abou Samra.

But Lebanon's top prosecutor Ghassan Oueidate informed Monaco in March last year that the local investigation had been dropped the previous month.

He said the case “ended with the submission of the documents to Beirut investigative judge, who issued a motion to dismiss and that this decision is definitive”, in the letter seen by the National.

Some lawyers feared at the time that the move would undermine the case in Monaco, where Mr Mikati has significant interests.

“You have to prove that there is an original offence, whose illicit proceeds were then laundered abroad, to establish money laundering,” said international lawyer Karim Daher, a member of the UN's panel on international financial accountability.

“If the Lebanese judiciary dismissed that a crime was originally committed on its soil, this could block the foreign procedure. It depends on the scope of the procedure.”

But Mr Daher also referred to the case of Teddy Obiang, son of Equatorial Guinea’s President Teodoro Obiang Nguema Mbasogo.

In 2017, Teddy Obiang was convicted in absentia by a French court of embezzlement, money laundering, corruption and abuse of trust.

The court demanded the confiscation of his assets in France, despite his acquittal in Equatorial Guinea for the same charges.

“The Monaco judiciary can also dismiss Lebanon's decision, by applying the same approach as the French courts in the notorious case of Teddy Obiang, if it considers the move as an obvious attempt to exonerate a political official,” said Mr Daher.

Political ploy?

Lebanon is battling with an unprecedented economic crisis after decades of mismanagement and squandering of public funds, for which the ruling class has so far managed to escape any accountability.

For Sherpa, a French anti-corruption body, the move to close Mr Mikati's case in Lebanon, just a month after Monaco's request for mutual legal assistance, was an attempt to derail the probe.

“The ploys of top politicians to escape foreign prosecution by torpedoing local judges' actions go back a long time,” said Sherpa founder and lawyer William Bourdon.

He pointed out that while Mr Oueidate said the case was dismissed on its merits, the judge handling the case said the investigation was time-barred.

“It would be unthinkable that the public prosecutor of Monaco could be fooled by this trick to extinguish the proceedings opened against Mr Mikati,” he said.

Mr Mikati, a telecoms tycoon from Tripoli, one of Lebanon's poorest cities, has been criticised in several instances for meddling in cases. He has denied interfering in the judiciary's work.

Contacted by The National, Maher Mikati, the caretaker Prime Minister's son, said the Lebanese investigation started with “politically motivated allegations, regarding illegal gains from subsidised loans, that have been totally rejected by the family”.

He said Monaco's request “is only normal due to the tight economic and physical presence of the Mikati family members in Monaco”, but such requests usually stay “strictly confidential and classified”.

“The reason that it was leaked to the public, in our opinion, is part of the continuing politically motivated smear campaign,” Maher Mikati said.

He said the authorities in Monaco had not formally contacted any members of his family and that no charges have been brought.

'Blatant violations'

The housing loan case was opened in Lebanon after a report sent by the Banking Control Commission sent to central bank Governor Riad Salameh was leaked in 2018.

It identified several violations, including the fact that the loans, which were supposed to be disbursed on a one-time-only basis to individuals, were granted to companies.

The report, seen by The National, alleged that “six real estate companies belonging to the Mikati group … received nine real estate loans” from Bank Audi.

The Lebanese bank issued loans worth more than 22 billion Lebanese pounds in 2010 (at that time equivalent to about $14.6 million) in 2010 and $14 million in 2013.

Based on these revelations, Judge Ghada Aoun opened a case in October 2019. She was removed from this investigation soon after by Mr Oueidate, amid an open feud between them. Mr Oueidate then entrusted Mr Abou Samra with the file.

Beirut-based watchdog group The Legal Agenda called Mr Abou Samra's decision to drop the case a “blatant violation” of criminal law principles.

The advocacy group's lawyers said that a new version of Lebanon's Illicit Enrichment Law removed any time limit for prosecuting such cases, but the judge decided to apply the old version, “without explaining why”.

Moreover, the judge calculated the prescription period from the date the last loan was granted, which violated the old law, they said.

The old version of the law stipulates that the three-year prescription begins when the offence is discovered or when the crime's effects end, which, the lawyers argue, is either 2018, when the scandal broke, or when the last loan was repaid, after 2019.

In both cases, it would have been within the three-year time limit of the old version of the Illicit Enrichment Law when the Lebanese probe was opened in 2019.

However, a senior judicial defended Mr Abou Samra's decision.

“The file was abandoned due to procedural issues and not because of its merits. The old law was applied because the facts happened before the issuance of the new one”, the official told The National, speaking on condition of anonymity.

“There have been more than three years between the last loan in 2013 and the start of the proceedings. We cannot say that the facts were discovered in 2018 because nothing has been done to disguise the purchase, and all the information is available in the land register.”