Lebanese leaders stashed wealth abroad as the country got poorer


By Bassem Mroue | Associated press

BEIRUT – A plethora of leaked documents confirmed that Lebanese politicians and bankers have stashed assets in offshore tax havens for years and used them to buy expensive real estate – an annoying revelation for masses of newly impoverished Lebanese who have fallen into one of the worst economic crises in the world in decades .

Some of the newly outed offshore account holders belong to the same ruling elite blamed for the collapse and derailment of the lives of ordinary Lebanese people who have lost access to savings and are now struggling to get fuel, electricity and medicine .

Bold names in the leaked documents include longtime central bank governor, a central figure in the failed politics that helped spark the financial crisis, as well as Prime Minister Najib Mikati and his predecessor.

The documents known as “Pandora Papers” were examined by the international consortium of investigative journalists and the first results were published on Sunday. The ICIJ report reveals the offshore secrets of wealthy elites from more than 200 countries and territories.

It was based on a review of nearly 11.9 million records from 14 companies providing offshore and letterbox start-up services. Clients of such firms often try to hide their assets and financial activities.

Starting an offshore company is not illegal, but it reinforces the perception that the rich and powerful are playing by different rules – a particularly worrying notion for many Lebanese.

The papers show members of the political class sending wealth overseas for years while asking people to deposit money in Lebanese banks to reassure them it was safe, Lebanese journalist Alia Ibrahim said.

“We’re not talking about ordinary citizens,” said Ibrahim, co-founder of Daraj, a Beirut-based independent digital media platform, and one of dozens of journalists around the world who worked with the ICIJ to investigate the documents.

“These are politicians who have served in public office for years and they are partly responsible for the current crisis Lebanon is going through,” she said.

Lebanon is in the middle of one of the world’s worst economic crises in 150 years, says the World Bank. More than 70% of the population has plunged into poverty, their savings almost wiped out in the crisis that began at the end of 2019 and was in part caused by decades of corruption and mismanagement of the political class.

Hundreds of thousands of people protested against corruption across the country from the end of 2019. But two years later, the same politicians are still ruling the country in the same way, protected by the sectarian system.

One of the protesters, Samir Skaff, said the Lebanese are not surprised that the political class “is made up of a bunch of thieves”.

“We’ve been saying that for years,” he says.

Offshore companies, even if they are not illegal, can be used to evade taxes or hide illegally obtained money. The leaks only further confirm what Lebanese have long been saying about their ruling class – although repeated reports of interference or illegal activity in the past have done nothing to change it.

One of the 14 companies listed by ICIJ as providers of offshore services is Trident Trust with 346 Lebanese clients making up the largest group, more than double the UK’s second largest country.
One focus of the revelations is Riad Salameh, who has been the central bank governor of Lebanon for almost 30 years.

Daraj reported that the documents showed that in 2007 Salameh started a company called AMANIOR based in the British Virgin Islands.

Salameh’s office told The Associated Press that the central bank governor had no comment on the documents. ICIJ quoted him as saying that he was declaring his assets and completing the reporting requirements under Lebanese law.

Salameh, 70, is under investigation in Switzerland and France for possible money laundering and embezzlement. Local media reported in recent months that Salameh and his brother, as well as one of his aides, were involved in illegal deals, including money transfers abroad despite capital controls imposed domestically. Salameh had denied such transfers.

Other documents showed that Marwan Kheireddine, chairman of Lebanon’s Al-Mawarid Bank, helped start a spate of offshore companies in the months leading up to the economic crisis in late 2019. In November of that year, his bank and others began to impose capital controls that meant Lebanese people could withdraw very little money from their accounts even if the currency collapsed, destroying the value of their savings.

The Pandora Papers reveal that Kheireddine gained control of an offshore company in the British Virgin Islands in 2019, which he then used to purchase a $ 2 million yacht.

In January 2019, he and his brother founded four companies in the UK on the same day, all based at the same London address and all registered as “small businesses,” which Daraj said meant they were exempt from the exam. In 2020, Kheireddine bought a $ 9.9 million New York penthouse that was sold by American actress Jennifer Lawrence, Lebanese media reported at the time.

Kheireddine is a former cabinet minister and a high-ranking member of the Lebanese Democratic Party. He did not respond to calls and text messages from the AP.

Prime Minister Mikati, a businessman who formed a new government last month, has owned a Panama-based offshore company since the 1990s. He used it to buy real estate in Monaco worth more than $ 10 million in 2008, Daraj reported from the documents.

The leaked documents also reveal that his son Maher was a director of at least two British Virgin Islands-based companies that the Monaco-based M1 Group used to maintain an office in central London.

Mikati released a statement stating that his family fortunes were amassed prior to becoming involved in politics and “in accordance with global standards” and are regularly audited by auditors. Contacted by the AP, Mikati’s media advisor Fares Gemayel said he had no comment.

Speaking to Daraj, Maher Mikati said that it was common in Lebanon to use offshore companies “because of the simple formation process” and denied that the purpose was to evade taxes.

Mikati’s predecessor as prime minister, Hassan Diab, was a co-owner of a letterbox company in the British Virgin Islands, Daraj reported.

Diab’s office said in a statement Monday that he helped start the company in 2015 but it did not do any business and he resigned from the company and gave up his stake in 2019.

“Is it illegal to start a business?” Said the statement.

Diab’s government resigned days after a massive explosion in Beirut on August 4, 2020 that killed and injured hundreds and destroyed the city’s port and surrounding neighborhoods. Diab was charged with willful homicide and negligence in the case. He denies any wrongdoing, but has refused to be questioned by the judge in charge of the investigation.

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