July 10, 2020 | Policy Brief

New Sanctions on Assad Regime Hit Lebanese Accomplices

July 10, 2020 | Policy Brief

New Sanctions on Assad Regime Hit Lebanese Accomplices

The departments of State and Treasury announced the designation of 39 sanctions targets, including two Lebanese firms, when the Caesar Act went into effect last month. The inclusion of these two firms reflects the essential role that Lebanese facilitators play in propping up the Bashar al-Assad regime; it also suggests the U.S. government will target many others within the Assad regime’s Lebanese networks.

Known formally as the Caesar Syria Civilian Protection Act of 2019, the new sanctions law bears the name of a Syrian military photographer who fled the country with extensive digital evidence of the regime’s systematic torture and execution of political prisoners. The law went into effect on June 17.

The first round of Caesar designations included Nader Kalai, a Syrian national who has permanent resident status in Canada and is a “regime insider with ties to Assad,” according to Treasury. The government also invoked Executive Order 13582, which authorized many of the early sanctions on the Assad regime in 2011, to designate a range of companies that Kalai controls, including two Lebanon-registered firms, Castle Invest Holding and Telefocus SAL Offshore.

Lebanon has served for decades as a hub for Syrian commerce with foreign partners, including illicit activities for the purpose of skirting U.S. sanctions. In 2018 and 2019, Treasury sanctioned a number of Lebanon-based companies involved primarily in the importation of fuel and other commodities but also in procurement for Syria’s chemical weapons program.

The European Union previously sanctioned Kalai in January 2019 for his role in supporting Assad. Kalai is also awaiting trial in Canada, where he became the first individual charged with violating Ottawa’s sanctions on the Syrian regime.

Kalai is an associate of Rami Makhlouf, Assad’s maternal cousin who served as the regime’s key economic power broker until a recent falling out with Assad. Kalai worked as a top executive at Syriatel, the country’s top mobile service provider, which Makhlouf founded. A closer examination of the Lebanese companies under Kalai’s control offers a window into the breadth of the Syrian regime’s business interests in Lebanon.

Kalai’s wife, Miriam al-Hajj Hussein, is also his business partner and holds leadership positions in blacklisted firms, although she was not personally designated. In addition to being a shareholder, director, and authorized signatory with Castle Invest, Hussein is listed as the director and secretary/treasurer of Telefocus Consultants Inc., the Canadian sister of Telefocus SAL Offshore, which was also designated. Hussein holds Canadian citizenship. She is also a co-founder, along with Kalai and two others, of a Lebanon-based holding company that is the majority owner of a real estate investment company in which Hussein holds key positions, including chairman. Finally, she is a co-founder of a Lebanon-based trading firm.

Firms under Kalai’s control also have ties to Makhlouf and his network. Kalai is the co-founder and majority owner of Beirut-based Siloserv SAL Offshore and is a co-founder of STS SAL Offshore, which some have alleged are front companies for Makhlouf, although there is no publicly available evidence to support this assertion. Nevertheless, many of the names on the Siloserv and STS corporate records also appear on the corporate record of Beirut-based Middle East Law Firm SAL, of which Rami Makhlouf and his brother Ihab (also on Treasury’s blacklist) are co-founders.

In addition, Issam Anbouba, who has been on the EU sanctions list since 2011, is a shareholder in Siloserv. Anbouba is a Makhlouf associate and a co-founder and partner in Cham Holding, which Treasury has identified as a Makhlouf front company. Muhammad Hassan Abbas, Makhlouf’s cousin and associate whom Treasury designated in 2017, is the majority shareholder of STS. Abbas is a co-founder of Barly Offshore SAL, which the Treasury Department designated in 2017 as a “front company used to move Rami Makhluf’s financial earnings out of Syria,” and which shares board members, lawyers, and auditors with STS.

The list of companies in this network is longer. Given the number of Lebanese firms with explicit ties to sanctioned individuals close to Assad, there is a high probability that Treasury will scrutinize these firms’ activity to assess whether they are vulnerable to designation under the Caesar Act. These companies are likely to have used the Lebanese financial system – which is another reason why a full audit of the Lebanese banking sector, not to mention accountability, is necessary.

Tony Badran is a research fellow at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Tony and CEFP, please subscribe HERE. Follow him on Twitter @AcrossTheBay. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


Lebanon Sanctions and Illicit Finance Syria