Lebanon Freezes Accounts of Former Central Bank Governor

Lebanese authorities on Monday froze the bank accounts of the country’s embattled former central bank governor, Riad Salameh, days after the United States, Britain and Canada imposed sanctions on him for “contributing to the breakdown of the rule of law in Lebanon” through decades of corruption.

The action, announced by Lebanon’s interim central bank governor, Wassim Mansouri, followed an internal investigation. It came just two weeks after Mr. Salameh left his post at the central bank, ending an 30-year tenure during which he almost single-handedly built up Lebanon’s economy from the ashes of war, and presided over its recent downfall.

The assets of four people close to Mr. Salameh were also frozen by the central bank. They include Mr. Salameh’s brother, Raja Salameh; his son, Nady Salameh; Anna Kosakova, whom U.S. officials described as Mr. Salameh’s former partner; and his former assistant at the central bank, Marianne Hoayek.

The U.S.-led coalition accused them of helping Mr. Salameh funnel hundreds of millions of dollars through layered shell companies to invest in European real estate so that he could amass an outsize fortune outside of the country.

Mr. Salameh, 73, resigned his post on July 31 as a cloud of investigation grew around him, following decades when he was virtually untouchable in Lebanon thanks to close ties to the country’s political elite. France, Germany, Luxembourg and Switzerland started investigations into Mr. Salameh several years ago over suspected financial crimes, including the suspected laundering of $330 million in funds by Mr. Salameh and his associates directly from Lebanon’s central bank.

Paris and Berlin issued Interpol arrest notices for Mr. Salameh in May, but Lebanon does not extradite its citizens to foreign countries.

Mr. Salameh could not be reached for comment. He has repeatedly denied any wrongdoing and insisted that he accumulated a personal fortune of $23 million during a 20-year career as a banker at Merrill Lynch.

The allegations of fraud had caused a sensation in Lebanon, a country that has been suffering from a historic collapse. In recent years, many of its banks have became largely insolvent, unemployment has soared and the lira currency has plummeted in value, leaving many Lebanese to blame Mr. Salameh for their sinking standard of living.

A polished, canny political operator and a Lebanese-French dual citizen, Mr. Salameh has been enmeshed in Lebanon’s politics since a previous prime minister, Rafik Hariri, named him central bank governor in 1993. Mr. Salameh had been Mr. Hariri’s private banker at Merrill Lynch.

Mr. Hariri was trying to rebuild Lebanon after a disastrous 15-year civil war, and Mr. Salameh set out to stabilize the currency and reel in foreign investment. The country offered high interest rates that attracted billions in deposits in Lebanese banks.

Mr. Salameh’s supporters hailed him as a skilled savior for keeping the economy stable. But ultimately, his economic strategy required ever more borrowing to pay existing creditors, and it collapsed in recent years in what some critics have called a giant Ponzi scheme.

In 2019, Lebanon entered an economic free-fall that, the World Bank said in 2021, may rank in the top three worldwide over the last 150 years, citing a “brutal” economic contraction of a magnitude “usually associated with conflicts or wars.”

Despite the calamity, Mr. Salameh until recently had not faced serious calls by Lebanese politicians to step down.

But the corruption investigations in Europe began to pose new threats to his standing. Two months after the Interpol arrest warrants were issued, the United States, with Britain and Canada, announced the sanctions on Mr. Salameh, saying he “contributed to Lebanon’s endemic corruption and perpetuated the perception that elites in Lebanon need not abide by the same rules that apply to all Lebanese people.”

The former central bank governor “used his position to place his personal financial interests and ambitions above those of the people he served, even as the economic crisis in Lebanon worsened,” the Treasury under secretary for terrorism and financial intelligence, Brian E. Nelson, said in a statement last week.

Hwaida Saad contributed reporting.

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