Investigation into Banque du Liban Governor and Brother for Embezzlement and Money Laundering

A judicial source said that the brother of the Governor of the Banque du Liban attended, on Thursday, a session in Beirut with European investigators investigating whether the two brothers were involved in “embezzlement and laundering” hundreds of millions of dollars of public funds over more than a decade.

Riad Salameh, the governor of the bank, and his brother, Raja, are being investigated in Lebanon and at least five European countries, on suspicion that they took more than $300 million from the central bank by collecting commissions as fees from bond buyers and then transferring the money to Fawry. Associates owned by Raja.

Both brothers deny any wrongdoing.

Raja told investigators, in a session that lasted nearly five hours during which he was questioned about his brother’s wealth, that Fawry was solely owned by him. He added that $155 million of the funds he raised came from investment profits made over 10 years through accumulated interest and foreign exchange transactions.

The 72-year-old governor earlier denied embezzlement, saying the commissions collected were not public funds.

According to French court documents seen by Reuters, French prosecutors say Fawry’s money was used to make “several” real estate purchases in Europe and the UK.

The documents say prosecutors suspect that Riaz used forged bank documents in Raja’s name to cover up illicit sources of wealth.

European investigators interrogated the governor of the Banque du Liban in Beirut over two days in March, asking about the bank’s relationship with Fawry, the bank’s ruler’s assets abroad, the source of his wealth and the transfers he made to his partners and relatives.

European investigators are also scheduled to interrogate Youssef Al-Khalil, the caretaker finance minister who still holds the position of head of financial operations at the Banque du Liban, on Friday.

French prosecutors have told Riad they intend to press charges of fraud and money laundering during a hearing scheduled in France on May 16.

Last spring, Raja was detained in Lebanon for nearly two months, accused of involvement in “graft” in which his brother was also involved.

Raja was released on a record bail of 100 billion Lebanese pounds, equivalent to approximately $3.7 million according to the market exchange rate at the time.