June 2, 2023 | Policy Brief

Top U.S. Lawmakers Want Action Against Lebanon’s Corrupt Central Bank Chief

June 2, 2023 | Policy Brief

Top U.S. Lawmakers Want Action Against Lebanon’s Corrupt Central Bank Chief

The chairman and ranking member of the House Foreign Affairs Committee sent a letter on Tuesday to Secretary of State Antony Blinken calling on the administration to “support independent, international investigatory efforts into egregious fraud and malfeasance by the governor of Lebanon’s Central Bank,” Riad Salameh. Salameh was close to Washington for decades but has fallen from grace amid exposure of his corrupt practices and legal action against him in Europe.

The congressional letter landed on Blinken’s desk as investigations into Salameh’s banking practices progressed in Europe. On May 16, France issued an international arrest warrant against Salameh after he failed to appear before French prosecutors. Interpol issued a red notice, a global call to arrest the Central Bank Governor, three days later. A German international arrest warrant arrived on May 23, and Interpol issued a second red notice on May 30. Currently, Salameh is in Lebanon, where local authorities have confiscated his passports and imposed a travel ban.

Salameh, a former investment banker at Merrill Lynch, became governor of the Banque du Liban (BDL) in 1993. For nearly three decades, industry experts applauded Salameh for his fiscal prowess and credited him with keeping Lebanon’s economy stable despite political assassinations, war with Israel, and global financial meltdown.

The tide turned against Salameh in 2019 when Lebanon’s financial sector collapsed. Salameh, the chief architect of an interest rate scheme credited with keeping Lebanon afloat, now appeared responsible for his country’s implosion.

Accountability Now, a Swiss human rights organization, filed the first complaint against Salameh in Switzerland in April 2020. The group claimed Salameh employed his brother’s brokerage firm to handle government bond sales and proceeded to launder at least $330 million in commissions between 2002 and 2015. A French anticorruption group filed another money laundering complaint against Salameh in France.

Germany, Luxembourg, and Liechtenstein have since opened their own probes and, in March 2022, the European Union criminal justice cooperation organization froze $130 million in Lebanese assets across Europe linked to the Salameh investigations.

This past January, the U.S. Treasury Department reported that Salameh worked with sanctioned Hezbollah financier Hassan Moukalled, whose front company “was reportedly collecting millions of U.S. dollars for the Central Bank of Lebanon.”

Even after Lebanon’s economic implosion began, Washington stood by Salameh. Then U.S. Ambassador to Lebanon Dorothy Shea said in 2020 it was “a mistake to demonize or scapegoat any one person or institution for Lebanon’s economic collapse.” The United States, she maintained, “worked very closely with [Salameh] over the years, and he enjoys great confidence in the international financial community.”

Formally, Salameh remains central bank governor, though his sixth and final term ends next month. At a press briefing this week, a State Department spokesperson maintained, “it is for the Lebanese government to determine who will serve” as governor and that Washington will “work with the designated governor in his or her official capacity.”

President Biden pledged during his first year in office to establish “the fight against corruption as a core U.S. national security interest.” If so, U.S. policy toward Lebanon is falling far short. Fourteen months after reaching an economic reform agreement with the International Monetary Fund (IMF), Beirut has failed to implement the reforms necessary to unlock a $3 billion IMF bailout. And last week, the Financial Action Task Force (FATF), an international financial crime watchdog, warned that Lebanon will likely join FATF’s “grey list” of countries with insufficient anti-money laundering and counter-terror financing practices. 

In their letter to Blinken, House lawmakers called on the administration “to use all available authorities, including additional targeted sanctions … to make clear to Lebanon’s political class that the status quo is not acceptable.” That is sound advice; corruption is rife among Lebanese elites. And as a member of FATF, the United States should ensure Lebanon joins the grey list if it fails to implement major reforms. Passivity is not an acceptable policy.

Natalie Ecanow is a research analyst at the Foundation for Defense of Democracies, a non-partisan research institute in Washington, DC, focusing on national security and foreign policy. Follow FDD on Twitter @FDD.


Lebanon Sanctions and Illicit Finance