The Salameh Investigation: Redemption for the Swiss Courts or the Rendition of a Classic Scandal?
Opinion Analysis by Yousef Khalil, Contributor
February 2nd, 2021
Riad Salameh, the governor of the Central Bank, has certainly been no stranger to controversy. An arguably highly esteemed banker with a national and international reputation prior to the October 2019 uprisings, Mr. Salameh has certainly seen better days. Reports describing his so called “financial engineering” operations as nothing but a series of Ponzi schemes have taken their toll on the governor’s public image and professional record. His interactions with the media since the start of the crisis have been nothing short of appalling.
Salameh has become sort of a laughingstock for the Lebanese people, with ridiculous comments such as “The Lira is fine” clearly showing the man has been living in denial. He has perhaps become Lebanon’s most notorious figure, and one of its biggest villains.
Recent allegations that Mr. Salameh funneled about USD 350 million out of BDL’s accounts through his brother Raja’s company have prompted Swiss authorities to open a new investigation.[1] Last Thursday, the Swiss attorney general requested legal assistance from Lebanon’s prosecutor general, Judge Ghassan Oueidat, to question Salameh about the money laundering and embezzlement claims. This investigation could prove vital for the recovery of Lebanese depositors’ hard-earned savings, and for holding Mr. Salameh and his cronies accountable. The question is: will the Swiss come good? Past examples do not show promising signs.
Although renowned for its delicious chocolates, picturesque Alps, and expensive watches - Switzerland has also acquired a much unwanted reputation. It has been known to be a safe haven for money launderers long before the world was introduced to Martin Scorsese’s “The Wolf of Wall Street”. To add insult to injury, Swiss prosecutors have been involved with numerous scandals, most notably in the Magnitsky case. In 2009 Russian tax lawyer Sergei Magnitsky was investigating an extortion case against Russian officials who had illegally seized a $230m tax refund from an investment firm. Magnitsky was arrested and accused by Russian authorities for colluding with the firm, before being left to die in prison because staff had neglected his worsening health condition.[2] It was really as the saying goes: “in this world nothing can be said to be certain, except death and taxes.”
Investigations after Magnitsky’s death traced some of the purloined money to Russian officials’ private accounts in Switzerland. Switzerland consequently launched its own investigation with the then Swiss attorney general Michael Lauber leading the case. What followed was a shocking revelation. A photo of Mr. Lauber and two of his colleagues schmoozing with a top Russian prosecutor on a Siberian boar hunting trip surfaced. Not to cast any doubt on the Russians’ hospitality, but the timing of the trip was a little too convenient.[3] Lauber was later discovered to have accepted various gifts from Russian prosecutors throughout his career.[4] Considering that he was later impeached before stepping down in 2019, in yet another scandal involving FIFA (the football governing association),[5] it is highly unlikely that this hunting trip was an innocent outing between colleagues.
The Magnitsky scandal was a huge blow to the credibility of Swiss law enforcers. It is one thing to have a “no questions asked” approach towards dirty money, but a whole other deal to act as an accessory for corrupt officials and shady people. Such scandals are at the heart of the Swiss paradox. Despite it being ranked as the 3rd least corrupt country by Transparency International in 2018,[6] Switzerland’s banking sector was deemed the most corrupt banking sector in the world by the UK based Tax Justice Network (2018).[7] This signifies that the Swiss legal system has been effective at dealing with national corruption but poor in investigating and delivering justice regarding dirty foreign money in its banks.
What does all this mean for the allegations against Salameh? Only time will tell whether the Swiss courts will deliver justice to the Lebanese people or once again be accomplices to kleptocrats. One thing remains for sure: the Lebanese have no other choice but to place their faith in a foreign justice system that could not possibly be any more corrupt than their own.
[1] https://www.reuters.com/article/lebanon-crisis-cenbank/update-2-lebanese-prosecutor-questions-central-bank-governor-salameh-after-swiss-request-idUSL1N2JW0ZJ
[2] https://www.reuters.com/article/us-russia-magnitsky-idUSKCN1VH18P
[3] https://www.bloomberg.com/news/articles/2020-11-19/swiss-prosecutors-to-end-magnitsky-case-as-browder-calls-foul
[4] https://www.reuters.com/article/swiss-attorney-general-russia-idUKL8N2E85EN
[5] https://www.reuters.com/article/uk-swiss-soccer-fifa-idUKKCN24P157