Riad Salameh, Lebanon’s former central bank governor, was arrested on Tuesday, September 3, on fraud charges. Once hailed as a financial mastermind, his reputation has since crumbled due to corruption cases and the catastrophic collapse of the banking sector.
Salameh, 74, was widely regarded as the cornerstone of Lebanon’s financial system until its collapse in 2019. The financial meltdown left many Lebanese impoverished, freezing deposits and exposing the fragility of the banking system he once managed. As investigations into his tenure expanded globally, Salameh’s image soured further, with multiple countries probing his involvement in embezzling large sums of public money.
According to a Lebanese judicial source, Salameh’s arrest is related to money laundering, fraud, and embezzlement charges tied to a Lebanese brokerage firm, Optimum Invest. This is just one of several ongoing investigations involving the former governor. However, the CEO of Optimum Invest told Reuters that a recent financial audit revealed no wrongdoing by the firm in its dealings with the central bank.
The investigation into Salameh is separate from earlier inquiries regarding commissions that the central bank charged local banks for government securities. The proceeds from these commissions were allegedly channeled into Forry Associates, a company owned by Salameh’s brother, Raja. A Swiss investigation into whether the Salameh brothers illicitly took over $300 million from the central bank between 2002 and 2015 led to further allegations of financial misconduct.
Both Riad and Raja Salameh have denied any wrongdoing or involvement in misappropriating public funds. Riad Salameh stepped down as central bank governor in July 2023, asserting that he had always worked within the law and respected legal rights.
In the wake of his departure, Salameh was sanctioned by the United States, United Kingdom, and Canada, who accused him of corrupt practices for personal enrichment. He has repeatedly denied these charges. French and German authorities have also sought his arrest, issuing warrants and Interpol Red Notices against him. A French warrant cited organized money laundering, while the German warrant accused him of money laundering. Salameh has challenged these warrants through legal means.
Despite the serious allegations, Salameh’s tenure had once been marked by high praise. He was considered a potential presidential candidate and received accolades at numerous international financial conferences. His leadership had instilled confidence in Lebanon’s financial system, promising stability through high interest rates and a fixed exchange rate that lasted from 1997 until the financial crisis.
However, as Lebanon’s economy faltered, largely due to reduced remittances and mismanagement, Salameh’s policies came under fire. Critics described his efforts to prop up the system with high-interest borrowing as a “Ponzi scheme.” While the central bank maintained that its actions were legal, critics argue that the system relied on new borrowing to pay off existing debt.
As the investigation continues, Salameh’s legacy as the steward of Lebanon’s financial system appears to be forever tarnished, leaving many to question the future of the nation’s economy.