August 10, 2023 | Policy Brief

New U.S., UK, Canadian Sanctions Target Former Lebanese Central Bank Governor 

August 10, 2023 | Policy Brief

New U.S., UK, Canadian Sanctions Target Former Lebanese Central Bank Governor 

The United States, in coordination with the United Kingdom and Canada, imposed sanctions today on former Lebanese Central Bank Governor Riad Salameh and three of his associates.  Washington once considered Salameh to be an indispensable partner, but the Lebanese bank chief fell from grace after evidence of his corrupt behavior surfaced in Europe.  

Announcing the designations, the U.S. State Department explained that Salameh “used his office to engage in a variety of unlawful self-enrichment schemes” and that he “and his co-conspirators placed their personal and financial interests and ambitions above those of the Lebanese people.” The Departments of Treasury and State failed to acknowledge that Salameh is also implicated in numerous Hezbollah financial schemes. 

Salameh became governor of the Banque du Liban (BdL) in 1993 after working as an investment banker at Merrill Lynch. He remained at the helm of Lebanon’s banking sector until two weeks ago, when his fifth term ended on July 31. 

For decades, the global banking sector celebrated Salameh for stabilizing Lebanon’s economy amidst political turmoil. But when Lebanon’s economy collapsed in 2019, Salameh became a prime suspect. It soon emerged that he was the architect of what some now consider one of the world’s largest state-run Ponzi schemes

Switzerland first opened a probe into Salameh’s practices after a human rights organization alleged that Salameh and his brother Raja laundered at least $330 million between 2002 and 2015. France followed suit when a domestic anticorruption group accused the Salameh brothers and their BdL colleague, Marianne Hoayek, of laundering millions through luxury real estate. 

The U.S. government also sanctioned Raja Salameh and Marianne Hoayek as part of today’s action.  

Riad Salameh’s legal woes did not end in Switzerland and France. Germany, Luxembourg, and Liechtenstein are also investigating Salameh’s banking practices. And in May, France and Germany issued international arrest warrants against the BdL governor. Interpol issued red notices against Salameh on May 19 and May 30

Washington was comparatively slow to sound the alarm. But earlier this year, senior lawmakers on the House Foreign Affairs Committee sent a letter to Secretary of State Antony Blinken urging the administration to “support independent, international investigatory efforts” into Salameh’s “egregious fraud and malfeasance” and to “use all available authorities, including additional targeted sanctions on specific individuals contributing to corruption and impeding progress in the country.” 

President Joe Biden pledged during his first year in office to prioritize “the fight against corruption.” So, today’s designations are a welcome step in the right direction. Even so, U.S. policy in Lebanon is not up to par. Corruption runs rampant among the Lebanese elite.  

Nearly a year-and-a-half has elapsed since Beirut reached an agreement with the International Monetary Fund (IMF) to rescue its crippled economy. But the country’s Hezbollah-dominated government has failed to implement the reforms necessary to unlock the $3 billion IMF bailout. 

This month also marked three years since a devastating explosion rocked the Port of Beirut, killing over 200 people. Evidence suggests that Hezbollah and its political allies are responsible for the disaster, but Hezbollah continues to obstruct judicial investigations. So far, no one has been held accountable.  

Politically, Lebanon is not faring better. The country has been without a president since last fall when then President Michel Aoun’s term ended in October. The Lebanese Parliament has failed 12 times to elect a successor. Here too, Hezbollah continues to hold the process hostage

Washington may pay lip service to reform but continues to back the Lebanese status quo by pumping military and economic assistance into a broken state.  

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. 


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