U.S. Weighs Sanctions Against Lebanon Central Bank Chief
05 Mar 2021

The U.S. is considering sanctions against Lebanon’s long-serving central bank chief as a broader investigation into the alleged embezzlement of public funds in the country gathers pace, according to four people familiar with the matter.

Officials within the Biden administration have discussed the possibility of coordinated measures with their European counterparts targeting Riad Salameh, who’s led the Middle Eastern nation’s monetary authority for 28 years, said the people, who requested anonymity because the talks are private.

The discussion has so far focused on the possibility of freezing Salameh’s overseas assets and enacting measures that would curtail his ability to do business abroad, the people said. Deliberations are ongoing and a final decision over whether to take action may not be imminent, they said. Salameh denies any wrongdoing.

U.S. authorities have considered penalizing Salameh before. The possibility emerged as recently as last year, but then-President Donald Trump wasn’t interested in taking action, two of the people said. His administration focused much of its Middle East policy on countering the influence of Iran and its proxies like Lebanon-based Hezbollah, whereas President Joe Biden has initially emphasized accountability on corruption and human rights abuses.

“The United States supports the Lebanese people and their continued calls for accountability and the reforms needed to realize economic opportunity, better governance and an end to the endemic corruption,” U.S. State Department spokesman Ned Price said in a press briefing on Thursday, adding “I wouldn’t want to preview or speak to any potential policy responses at this time.”

Should any measures be imposed, it would be a rare instance in which a foreign government has taken action against the sitting head of a central bank over alleged corruption. It would also amount to a remarkable reversal of fortune for one of the world’s longest-tenured monetary policy chiefs and further complicate Lebanon’s efforts to win international financial support.

Salameh, 70, was once celebrated as the financier who stabilized Lebanon’s currency against all odds and was even considered at one time to be a presidential contender. As recently as 2019, he earned an A-grade from the New York-based magazine Global Finance in its annual rankings. Euromoney named him central bank governor of the year a decade earlier.

A household name on Wall Street and in foreign capitals, Salameh has been one of the few constants over the past three decades as Beirut wrestled with war, debilitating political standoffs and an economic meltdown.

That backdrop sparked mass protests in October 2019 against a political class accused of bleeding state coffers through decades of corruption and mismanagement. Demonstrators also blamed Salameh for ever-riskier policies to sustain a financial model that ultimately failed, wiping out the life savings of a generation of Lebanese. More than half the population now lives in poverty, according to the United Nations.

Swiss Probe

In January, the Swiss attorney general’s office asked the Lebanese government for help with an investigation into money laundering linked to possible embezzlement from the coffers of Banque du Liban, as the central bank is known. Swiss authorities didn’t identify the target of their probe and the Lebanese judiciary said it had been approached about transfers abroad made via the central bank.

The investigation also involves other jurisdictions, including the U.K. and France, where authorities are reviewing Salameh’s links to properties, shell companies and overseas bank transfers, the four people said. While the Swiss probe lends momentum, potential American sanctions don’t necessarily depend on its outcome as much as on shifting political calculations, they said.

By Ben Bartenstein and Dana Khraiche, Bloomberg, 4 March 2021

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