Lebanese bankers told European prosecutors they believed that commissions, now at the centre of a graft probe, had been paid to the Central Bank, four sources said, while investigators suspect the cash illegally ended up with the Governor’s brother, Reuters reports.
Prosecutors from Germany, France and Luxembourg have been in Beirut as part of the money laundering investigation. They suspect Central Bank Governor, Riad Salameh, and his brother, Raja, illegally took more than $300 million from the Central Bank between 2002 and 2015 and invested some of the funds in Europe.
The two men deny diverting or laundering public funds, saying the $300 million was earned legally. The Governor, who has held the post for three decades, says he is being made a scapegoat for Lebanon’s financial crisis that erupted in 2019.
European prosecutors have been hearing testimonies from Lebanese bankers and officials over the past week for the first time in the investigation that has focused on who received the commissions, the four people familiar with the matter told Reuters.
The European prosecutors, who have yet to file any formal charges, suspect the Central Bank collected the commissions as a fee from bond buyers and then transferred the funds to Forry Associates, owned by the Governor’s brother, the sources said.
The bankers and officials told the visiting European prosecutors that they were not aware that the funds had gone to Forry Associates, the four sources said.
The office of Lebanon’s Chief Prosecutor in a statement said on Friday the visiting Europeans had wrapped up their trip and cooperation would continue.
Reuters reported last year, after viewing documents that the Central Bank had not made clear to private banks that commissions it charged went to Forry Associates.
Pierre-Olivier Sur, a French lawyer for Riad Salameh, dismissed the accusations. He said commissions collected by Forry were “the price paid for intermediation work provided to bring together buyers and issuers of bonds”.
He said those paying commissions for buying bonds might not have known the beneficiary was Forry, which he said had a contract authorised by the Central Bank’s management and supervising bodies.
A person close to Raja Salameh said the Governor’s brother denied any misappropriation of public funds.
The four sources said former Central Bank officials and private bankers had told the European prosecutors they first heard of Forry Associates when the investigation began and the name appeared in the media. They told them that they had no reason to believe commissions paid on government securities went to anyone but the Central Bank, the sources said.
A separate but related Lebanese probe charged Riad Salameh with illicit enrichment in March, which he has denied.
The Governor retains the support of some of Lebanon’s most powerful politicians, including Nabih Berri, the Parliament Speaker, who has held that top post for decades.