International investigators are looking at suspect investments in Malta as part of a massive money laundering and embezzlement probe into former Central Bank of Lebanon governor Riad Salameh.
Lebanon’s interim central bank governor on Monday froze the accounts of the bank’s embattled former chief and close relatives and associates days after they were sanctioned by the United States, the United Kingdom and Canada.
The move came after the bank’s Special Investigation Commission – in charge of fighting money laundering and terrorism financing – named the former governor, his son Nady, brother Raja, close associate Marianne Hoayek and former partner Anna Kosakova.
Salameh has repeatedly denied allegations of corruption, embezzlement and illicit enrichment.
He insists that his wealth comes from inherited properties, investments and his previous job as an investment banker at Merrill Lynch.
The US Treasury Department said last week that the US coordinated the sanctions with the UK and Canada and that assets connected to Salameh would be frozen.
Salameh is also being investigated in Lebanon. The Lebanese judiciary took his passport and imposed a travel ban soon after receiving the Interpol notices.
France, Germany, and Luxembourg are investigating Salameh and close associates over alleged financial crimes, including illicit enrichment and the laundering of $330 million. Paris and Berlin issued Interpol notices on Salameh in May.
Investigators from several countries are now looking into Salameh and his son’s shareholdings in a Malta-registered company that has come under their microscope.
Reports have circulated that the Lebanese central bank had hired Forry Associates Ltd., a brokerage firm owned by the governor’s brother, Raja Salameh, to handle government bond sales from which the firm received $330 million in commissions.
According to a Swiss investigation, a Panama-based company, Westlake Commercial, of which Riad Salameh is the beneficial owner, reportedly received $7 million between 2008 and 2012 from Forry Associates.
Analysing financial flows, a French judge has concluded that funds originated from Forry’s Swiss account “via a succession of banking operations involving several offshore structures, Amanior and Westlake Commercial, of which Riad Salameh is the beneficial owner”, through his Luxembourg accounts, the judge said in the seizing order.
Belize-based Amanior International Ltd and Panama-based Westlake Commercial Inc are offshore entities with no commercial activity that were intermediaries in the alleged money laundering scheme, according to the European investigation.
This “demonstrates a money laundering scheme allowing [it] to hide the origin of the funds and the actual beneficiary of the acquired properties’ origin”, the French judge added.
The Malta connection
In August 2008, Riad Salameh purchased, through Westlake Commercial, a 5% share in Crossbridge Holding for $2.5 million.
The Valletta-based Crossbridge Holding is the parent company of Crossbridge Capital, a UK-based wealth management firm where the governor’s Nady Salameh worked as one of its first employees. The company now has some $3 billion under advisement.
Lebanese legislation precludes the central bank governor from engaging in external business activities, apart from holding securities or shares in joint-stock companies.
Asked last week about Riad Salameh’s investment in the company, a Crossbridge representative said, “Crossbridge conducted all the due diligence required by the Malta authorities for any shareholder holding a minority stake in a company, i.e. the identity of beneficial ownership and a bank reference.”
Westlake transferred its shares to another Panama-based company, Crossland Assets Corp in 2009, as found by an investigation conducted by the Organised Crime and Corruption Reporting Project and Daraj.
That company moved to Liechtenstein in 2018 and became Crossland Limited. The company is reported to have multiple bank accounts in Lebanon belonging to Riad Salameh.
The Malta-based company came under further fire in 2015 when Bank Audi, one of Lebanon’s largest banks, acquired a 19% stake in the company – raising conflict of interest concerns since Salameh was both a regulator and joint-shareholder with Bank Audi in Crossbridge.
A media representative for Bank Audi told the press, however, that the ultimate owner of Crossland’s stake in Crossbridge was reported to them as being Salameh’s son Nady and that they performed all required regulatory filings on the acquisition.
Crossland retained ownership of its share until December 2016 when it sold it to Beryte International NV, a subsidiary of Bank Audi, which also denies any wrongdoing.
Salameh has dismissed the European probe as part of a media and political campaign to scapegoat him. But a forensic audit into Lebanon’s central bank by a New York-based company last week showed yearslong misconduct by Salameh and $111 million in “illegitimate commissions.”
The 331-page audit by Alvarez & Marsal was among key demands by the international community and the International Monetary Fund, which over the years has increasingly lost confidence in crisis-hit Lebanon.
Once hailed as Lebanon’s guardian of financial stability, Salameh has been among the officials most blamed for policies that led to the country’s economic crisis, which has decimated the value of the Lebanese pound by around 90% against the US dollar and sparked triple-digit inflation.