Lebanon Central Bank workers strike after judge raids HQ

Judge Ghada Aoun was attempting to carry out an arrest warrant for the bank’s governor, Riad Salameh, who is accused of corruption.

Lebanon Central Bank governor Riad Salameh
Riad Salameh was once viewed as a competent overseer of the Lebanese economy, but is now blamed by many for the country's economic collapse [File: Mohamed Azakir/Reuters]

Beirut, Lebanon – Employees at Lebanon’s central bank have begun a three-day strike after a prosecuting judge attempted to arrest the bank’s governor.

Judge Ghada Aoun, who authorised a judicial raid on the Lebanon Central Bank headquarters in Beirut on Tuesday, has tried more than once to arrest Riad Salameh, Lebanon’s longtime central bank governor, and has openly accused the country’s politicians of protecting him from prosecution.

However, Salameh still commanded loyalty from his employees, who began their strike on Wednesday in protest at what they called the judge’s “militia” tactics.

Salameh is now being investigated in five European countries, as well as Lebanon, for possible money laundering and illicit enrichment.

In Europe, authorities have frozen more than 100 million euros worth of assets belonging to Salameh and a handful of associates as they investigate the apparent transfer of hundreds of millions of dollars from Lebanon’s central bank to a brokerage company registered to Salameh’s brother.

Aoun has charged Salameh with falsifying the budget of Lebanon’s central bank to hide losses.

The judge told Al Jazeera on Wednesday that she was uncertain about whether she would try to arrest Salameh again.

Aoun has previously attempted to execute the warrant at the governor’s private residence, but to no avail.

“I feel the people in the street must react. It’s their money. I’m facing a big mafia,” Aoun said, referring to the politicians she has said are protecting Salameh.

Aoun said she was first given permission to arrest Salameh from one judicial authority before another judicial authority revoked it. She entered the central bank’s building but did not enter Salameh’s office.

“It’s clear they don’t want to arrest him,” she said.

Lebanon’s economic collapse has seen the country’s currency lose 90 percent of its value since 2019, reducing the monthly minimum wage from the equivalent of $450 to less than $30 and plunging more than 80 percent of the country into poverty.

Banks have frozen depositors’ accounts in order to protect their own liquidity, robbing people of their savings overnight.

Earlier this year, Aoun arrested Salameh’s brother, Raja, on embezzlement and illicit enrichment charges. He was eventually released on a bail of $3.7m dollars, the highest ever paid in Lebanon.

Fallen reputation

Salameh, who has been governor of Lebanon’s central bank for three decades, was once lauded for policies that appeared to shield Lebanon from global financial downturns that harmed other countries.

But since the collapse of the currency, the methods Salameh himself referred to as “financial engineering” have increasingly begun to look like a euphemism for misrepresenting the country’s financial situation.

Prime Minister Najib Mikati’s office released a statement on the attempted arrest on Tuesday, saying that an investigation into Salameh would only go forward if there was a political agreement on naming a new central bank governor. Salameh’s current term does not expire until next year.

Documents reviewed by Reuters last week disputed previous claims Salameh had made regarding an audit of the bank that had taken place and cleared him of any wrongdoing.

Salameh and other bank employees have repeatedly refused to provide basic documents that would allow companies hired by the Lebanese government to perform a basic audit of the bank and its operations.

Salameh has argued that he is protected by the country’s banking secrecy laws. He has also previously said he would travel to Europe to answer questions in investigations into his finances there, but has not yet done so.

While Lebanon’s financial collapse may have appeared sudden, some bankers who worked with Salameh first raised issues decades ago.

In one of the diplomatic cables released by Wikileaks from 2007, sent to Washington by then-US Ambassador to Lebanon Jeffrey Feltman, there are echoes of all of the allegations now being formally investigated.

“Rumored corrupt behavior, a penchant for secrecy and extralegal autonomy at the Central Bank, past closeness with Syrian leaders, unwillingness to disclose the amount of Lebanon’s net foreign exchange reserves, and resistance to the oversight of an IMF program,” one of the cables read.

It goes on to mention Salameh’s brother specifically:

“Salameh signed a contract with Canadian firm British-American Banknote for printing the new Lebanese currency when be became BDL Governor in the early nineties. Salameh’s brother, Raja, is involved in the deal … Raja Salameh earned a commission on the deal then, and continues to earn a commission to date every time new banknotes are printed (as the quality of the paper is not good and the new currency has to be replaced every few years).”

Source: Al Jazeera