In addition to France, Germany has also issued an arrest warrant for Riad Salameh, the governor of Lebanon’s central bank. German prosecutors suspect him of embezzlement, money laundering and forgery, among other things, the Reuters news agency reported last Tuesday.
The French order came a week earlier, after Salameh failed to show up at a hearing in Paris. The Lebanese banker would be questioned in the context of a European investigation into the embezzlement of more than 300 million euros and its laundering through the purchase of luxury apartments throughout Europe. After his absence, Salameh also received an arrest warrant from Interpol at France’s request.
It is a deep fall for the longest-serving central bank governor in the world. Salameh, 72, took office in 1993 and has long been seen as the man who rescued the Lebanese economy after the civil war (1975-1990) and steered it relatively unscathed through the financial crisis of 2008. It earned him the nickname ‘wizard’.
Read also: Sali Hafiz committed a bank robbery to get to her savings. Now she is a Lebanese folk hero
Fictional money
His tricks brought an appearance of wealth. By maintaining an artificial exchange rate of more than 1,500 Lebanese pounds against the dollar for 25 years, Salameh ensured a stable investment climate. In addition, he applied sky-high interest rates on government bonds, which commercial banks bought up and traded to foreign investors. For example, Lebanon turned into a rentier economy and fictitious money flowed into the country.
But the wizard was exposed. Due to years of mismanagement and corruption, the Lebanese banking sector completely collapsed in 2019. Since then, the Lebanese currency has lost 97 percent of its value and one dollar now costs almost 100,000 Lebanese pounds. Nevertheless, the central bank maintained the notional rate of 1,500 until the beginning of this year (this is now 15,000).
The Lebanese people are the victims of this. While corrupt politicians smuggled their own capital out of the country, along the same route Salameh allegedly used, the banks are limiting the amount of dollars that ‘ordinary’ account holders can withdraw. As a result, Lebanese saw their savings evaporate and about 80 percent of the population now lives below the poverty line.
Still, it remains to be seen whether European prosecutors will catch Salameh. In the case of an earlier arrest warrant against Carlos Ghosn, the Lebanese top executive at Renault and Nissan who fled Japan in an instrument case in 2019, the Lebanese authorities refused to extradite. Anyone who wants to avoid justice in Lebanon and has the necessary contacts will usually find a disappearing act.