Source: The National
Tuesday 21 March 2023 13:58:07
Lebanon took legal action last week by filing domestic and international lawsuits against its embattled Central Bank Governor Riad Salameh.
The move could pave the way for the recovery of assets allegedly bought using more than $330 million in embezzled public funds, if he is found guilty.
Charges were filed in Lebanon by Judge Helena Iskandar, president of the Cases Authority at the Ministry of Justice, last Wednesday against Mr Salameh, his brother Raja and his assistant Marianne Hoayek.
The three were accused of money laundering, bribery, forgery, illicit enrichment and tax evasion.
Ms Iskandar also lodged a similar complaint in France on Thursday, becoming a civil party, on behalf of the Lebanese state, to the French case against Mr Salameh, a judicial source told The National.
The lawsuits added to an already lengthy list of judicial proceedings against Mr Salameh, who was once praised as the architect of a thriving financial sector in the country before its unprecedented economic collapse that has plunged more than 80 per cent of the population into poverty.
At least six European countries — Belgium, France, Germany, Luxembourg, Liechtenstein and Switzerland — have opened investigations to determine if embezzled funds were used to buy luxurious European properties owned by Mr Salameh and his co-accused.
In 2021, a separate probe was opened in Lebanon, which led to charges being pressed against Mr Salameh, his brother and Ms Howayek in February.
Local and international investigators are looking into Forry, a company owned by Raja Salameh, which they believe to be a shell company created for the purpose of funnelling millions of dollars from the central bank.
Both brothers have denied any wrongdoing.
Mr Salameh repeated on Friday that he told European investigators in Lebanon that “no public funds went to a company owned by his brother”.
He also said no central bank funds had been channelled to his personal accounts.
However, the two complaints filed by the Lebanese state last week differ from these previous legal actions in that they aim to support local and international efforts to recover assets bought using stolen funds.
Lebanon is considered a victim but to recover misappropriated funds, in the event of a conviction, “it should actively claim its right as an injured party domestically and internationally, as such assets are not automatically returned to the victim state”, said Karim Daher, a lawyer and member of International Financial Accountability, Transparency and Integrity panel.
In Lebanon, misappropriated assets could be returned to those convicted of a crime after they serve their sentence and pay the penalties, he said.
However, abroad, confiscated assets are be sold for the benefit of the hosting country or plaintiffs.
In the French case against Mr Salameh, the two plaintiffs are the Collective Association of Victims of Fraudulent and Criminal Practices in Lebanon, a group of depositors whose savings are trapped in Lebanese banks, and Sherpa, an anti-financial crime NGO in France.
This means that in the event Mr Salameh is convicted in France, his assets there would be claimed by the two associations.
For months, civil society organisations have stressed the importance of following the right steps to recover assets stolen from Lebanon, which has suffered decades of endemic corruption during which public funds have been squandered, leading to one of the worst economic crises since 1850, according to the World Bank.
In September 2021, the Minister of Justice provided authorities with a legal note on the procedures to follow to retrieve stolen assets. However, not much was done until last week.
Lebanon's move came after French judge Aude Buresi, who is hearing the case against Mr Salameh, told Ms Iskandar that if Beirut did not lodge a complaint, it would be too late to claim potentially misappropriated assets, the judicial source said.
The latest developments could be good news for cash-strapped Lebanon.
“Nigeria has retrieved — and it is still retrieving since 2005 — hundreds of millions of dollars in stolen assets from abroad after graft probes,” said Mr Daher
But a major pitfall is the ability of the Lebanese state, which is ruled by the same elite that presided over the country's economic collapse, to manage the recovered money.
Mr Daher said this could be avoided through a legal framework adopted in 2021 on the “recovery of funds resulting from corruption”.
This includes the creation of a dedicated fund, with financial and administrative independence, to manage recovered assets and ensure they are not mixed with Treasury revenue.