France’s financial prosecutor has opened an investigation into Lebanon’s central bank governor Riad Salamé, becoming the second European country to probe the embattled banker’s dealings abroad.
The Parquet National Financier (PNF) said its inquiry began in late May and would examine allegations of conspiracy and money laundering as part of an organised group.
The move comes after two anti-corruption groups filed separate complaints to the French authorities asking them to examine whether Salamé had transferred “ill-gotten gains” out of Lebanon ahead of a banking crisis that began in 2019 and prevented millions of citizens from accessing their funds.
The complaints by Accountability Now and Sherpa allege that Salamé, three family members and an associate at the Lebanese central bank used illegal means to build up a “rich patrimony” in Europe.
France has followed Switzerland’s federal prosecutor in scrutinising Salamé’s overseas assets, which he insists are legitimate investments made with money he earned as a Merrill Lynch banker before becoming central bank governor in 1993. Swiss authorities began inquiries last year, which revolve around some $300m that was transferred from accounts held at Lebanon’s central bank to accounts in Switzerland.
Salamé’s lawyer in France dismissed what he described as a “preliminary” inquiry that was “at this stage, merely a communications operation or a political one”.
Salamé denies any wrongdoing.
The inquiries represent a challenge to the reputation of Salamé, who for years was credited with steadying the Lebanese economy in the face of political turmoil and regional conflicts. His legacy has been marred by his much-criticised handling of monetary policy during the severe economic crisis. Yet in the absence of political leadership, Salamé’s role in Lebanon has only become more critical. The World Bank went so far as to call the Banque du Liban “almost an exclusive policymaker”.
Lebanon is suffering a historic economic crisis, founded in decades of poor governance and corruption but exacerbated by the pandemic and last August’s Beirut port disaster. The World Bank last week said the banking crash was “likely to rank in the top 10, possibly top three” financial crises since the mid-19th century, after Lebanon’s economic output fell from an estimated $55bn in 2018 to just $33bn in 2020.
Stéphane de Navacelle, a Paris-based lawyer specialising in white-collar crime, said the inquiry was similar to earlier ones in which French investigators had examined the France-based assets of foreign officials to determine whether they were illegally obtained.
“The PNF is acting on its word to address potential white-collar crime that has a link to France,” said de Navacelle. “The country is increasingly comfortable taking leadership in enforcement when it comes to tracking down ill-gotten assets in cross-border cases.”
In 2017, the PNF seized the assets of Teodorin Obiang, the vice-president of Equatorial Guinea, and secured a conviction against him. It has taken similar actions against the political leaders of Gabon and the Republic of Congo.
France, which ruled Lebanon as mandate-holder after the fall of the Ottoman Empire, had taken the lead in trying to chaperone a deal for a fresh government among Lebanon’s squabbling politicians.