The Lebanese judiciary's recent decision to press charges against former Central Bank Governor Riad Salameh has sent shockwaves through the country, as the probe into alleged embezzlement of public funds takes center stage.

The investigation is centered on the dealings between the Banque du Liban (BDL) and Optimum from 2015 to 2018. During this period, Salameh, alongside Antoine Salameh—Optimum’s chairman and a distant relative—signed 45 contracts, which collectively generated around $8 billion. This amount represents approximately 15 percent of Lebanon’s gross domestic product.

Financial experts have labeled this scheme as an elaborate accounting trick designed to obscure financial losses.

According to leaked documents and interviews with experts, the forensic audit released by Alvarez & Marsal (A&M) in 2023 revealed that at least $111 million from these transactions was misappropriated, funneling money to undisclosed third parties, UAE's The National newspaper reported in an article published on Friday.

This amount was traced back to a consulting account under scrutiny in Europe, previously alleged to have been used as a slush fund for Salameh and his family.

Despite these revelations, the Lebanese judiciary is currently investigating Salameh for an alleged embezzlement of $42 million, a partial amount compared to the figures flagged by A&M. The identities of the beneficiaries of these commissions remain undisclosed.

Sources at BDL have confirmed to The National that the financial details of the accounts involved have been submitted to the relevant judicial authorities.

Experts familiar with the case have denounced the entire arrangement between BDL and Optimum as fraudulent. They describe the 45 contracts as "sham" transactions, which created fictitious gains to offset losses from unsustainable monetary policies by treating future interest payments as assets. These findings were initially uncovered in a confidential audit by Kroll, which was leaked in March.

The National also cited another leaked confidential audit by the international forensic audit firm Kroll, indicating that BDL lent money to Optimum to purchase bonds, which BDL would then buy back at a premium equal to future interest payments. The premium was then returned to BDL as a commission. Salameh defended these operations, stating they adhered to BDL's accounting framework and were not booked as profit but as revenue against postponed losses.

The dealings with Optimum were kept largely secret from BDL’s oversight board which includes the Central Bank governor, the four deputy governors, and the directors-general of the Ministries of Economy and Trade, and Finance.

The board's oversight has been described as “personalized” and “unscrutinized” in the forensic audit. Several board members told The National that Optimum’s transactions were never mentioned in meetings, and the contracts were never reviewed.

The first indication of issues with Optimum came in 2015 when the Capital Markets Authority (CMA) flagged "extravagant" transactions and high commissions. Despite recommending that Optimum's managers be barred from the industry, no action was taken, and BDL continued its dealings with the firm.

Optimum, unlike Forry Associates Ltd—a brokerage also under scrutiny—was not a shell company but a legitimate entity with clients. It was acquired by Levant Investment Bank SAL (LIBANK) in June 2020.

A foreign diplomatic source told The National that Salameh’s arrest would not impact the upcoming decision by the Financial Action Task Force (FATF) on whether to put Lebanon on its grey list for countries at increased risk of money laundering. The ongoing investigation, however, is expected to unravel more details about the financial mismanagement that has plagued Lebanon, potentially implicating additional figures in the crisis