Prosecutors from Germany, France and Luxembourg were in Beirut as part of the money laundering investigation. They suspect that central bank governor Riad Salameh and his brother Raja illegally took more than $300 million from the central bank between 2002 and 2015 and invested some of the funds in Europe.
The two men deny that they diverted or laundered public funds, saying the $300 million was earned legally. The governor, who has been in office for three decades, says he is becoming a scapegoat for Lebanon’s financial crisis that broke out in 2019.
European prosecutors have been hearing testimony from Lebanese bankers and officials over the past week for the first time in the investigation that focused on who received the commissions, the four people familiar with the matter told Reuters.
European prosecutors, who have yet to file formal charges, suspect that the central bank collected commissions as payment from bond buyers and then transferred the funds to Forry Associates, owned by the governor’s brother, the sources said.
The bankers and officials told visiting European prosecutors that they were unaware the funds had gone to Forry Associates, the four sources said.
The office of the chief prosecutor of Lebanon said in a statement on Friday that the Europeans who were visiting had finished their trip and the cooperation will continue.
Reuters reported last year, after seeing the documents, that the central bank had not made it clear to private banks that the commissions it charged went to Forry Associates.
Pierre-Olivier Sur, a French lawyer for Riad Salameh, denied the charges. He said the commissions collected by Forry were “the price paid for the intermediary work provided to bring together bond buyers and issuers”.
He said that those who pay commissions for the purchase of the bonds may not have known that the beneficiary was Forry, who he said had a contract authorized by the management and supervisory bodies of the central bank.
A person close to Raja Salameh said that the governor’s brother denied any misappropriation of public funds.
The four sources said that former central bank officials and private bankers had told European prosecutors that they first heard of Forry Associates when the investigation began and the name appeared in the media. They were told that they had no reason to believe that the commissions paid on government securities went to anyone but the central bank, the sources said.
A separate but related Lebanese trial charged Riad Salameh with illicit enrichment in March, which he has denied.
The governor retains the support of some of Lebanon’s most powerful politicians, including Nabih Berri, the parliament speaker who has held this key post for decades.
(Reporting by Laila Bassam and Timour Azhari in Beirut and David Gauthier-Villars in Istanbul; Editing by Tom Perry and Edmund Blair)
By Laila Bassam, Timour Azhari and David Gauthier-Villars
