Riad Salameh
Riad Salameh in 2020
Governor of Banque du Liban
In office 1 April 1993 – 31 July 2023
President	Elias Hrawi Emile Lahoud Michel Suleiman Michel Aoun
Preceded by	Michel El Khoury
Succeeded by	Wassim Mansouri (acting)
Personal details
Born	Riad Toufic Salameh (1950-07-17) 17 July 1950 (age 73) Antelias, Lebanon
Children	4
Alma mater	Collège Notre Dame de Jamhour American University of Beirut (BA)
Signature

Riad Toufic Salameh ( Arabic: رياض توفيق سلامة; born 17 July 1950) is a Lebanese economist. He previously served as governor of Lebanon's central bank, Banque du Liban, from April 1993 until July 2023. ^{[1] [2]} He was appointed Governor by decree, approved by the Council of Ministers for a renewable term of six years. He was reappointed for four consecutive terms; in 1999, 2005, 2011 and 2017. ^{[3] [4]} Riad Salameh left his position on 31 July 2023 upon the end of his term, and due to the Lebanese parliament’s failure in electing a new president and forming a new government capable of appointing a successor he was succeeded by his first deputy Wassim Mansouri in an acting capacity ^[5]

He is the longest-serving central bank governor in the world. ^[6] Although credited for maintaining the stability of the Lebanese pound until 2019, ^[7] Salameh has been accused of corruption, money laundering and running the largest Ponzi scheme in history; he was additionally labeled "the world’s worst central banker". ^{[8] [9] [1] [10]} He is currently under sanctions by Canada, the United Kingdom and the United States. ^[11]

Early life

Riad Salameh was born in Antelias in 1950 into a Christian Maronite family of successful business people, long based in Liberia. ^[12] His father Toufic Salameh owned the Cedars Hotel in Broummana, and his mother Raniah was a "well-known charitable activist" and Lebanese Red Cross member who was murdered in 1982. ^[12] He has three siblings. ^[12]

Salameh grew up in his grandfather's house in Antelias, and attended the Jesuits' Collège Notre Dame de Jamhour, followed by a bachelor's degree in economics from the American University of Beirut. ^[12]

Career

Merrill Lynch

From 1973 to 1993, Salameh worked at Merrill Lynch in Beirut and Paris, ^[13] as an executive manager, ^[14] and then became a vice-president and financial advisor. ^[15] He met with businessman Rafic Hariri, a huge investor in the company, ^[16] and became his portfolio manager. ^[17]

Lebanon's central bank

After the end of the civil war, Hariri became the prime minister and appointed Salameh as the governor of Lebanon's central bank. ^[17] He took office on 1 August 1993, and was subsequently reappointed for four consecutive terms in 1999, 2005, 2011 and 2017. Salameh chairs the BDL Central Council, ^[18] the Higher Banking Commission, the AML/CFT Special Investigation Commission ^[19] and the Capital Markets Authority.

He is a member of the board of governors at the International Monetary Fund (IMF) ^[20] and at the Arab Monetary Fund (AMF). In 2012, he chaired the annual meetings of the International Monetary Fund (IMF) and the World Bank Group in Tokyo. ^[21]

On 1 July 2013, Salameh began a two-year term to co-chair the Financial Stability Board (FSB) Regional Advisory Group for the Middle East and North Africa. He was chairman of the board of governors of the AMF in 2013.

Endeavors

Edward Gardner of the International Monetary Fund praised Salameh's policies: "You could have thought they had a crystal ball. It was very wise of the Lebanese regulators not to get involved in all these risky international investments that turned out to be the doom of many banking systems." ^[22]

In a 2009 interview with Executive magazine, when asked when will Lebanon feel the impacts of the global financial crisis, Salameh answered:

"Lebanon will not feel the effects of the financial crisis, because we took the necessary measures preemptively. This crisis has turned out to be a confidence crisis. Confidence in the banking sector in Lebanon and in the monetary in general, is very high, as witnessed by the large conversions from dollars to the Lebanese pound. In 2008, de-dollarization was important and the central bank bought more than $8 billion from the markets. Dollarization rates in deposits in the banking sector dropped from 77 percent to around 69 percent during 2008. The measures that we took preemptively were essentially based on preventing the banking sector from leveraging its balance sheets and on the other side, regulating the structured products and forbidding the acquisition of toxic assets — like the sub-prime — by banks. So the banking sector in 2008 recorded profits that were over $1 billion, which was the best year for them. The liquidity that we do have in our system will prevent any crisis in 2009." ^[23]

In 2016, he launched “financial engineering” operations with local lenders, combining a series of swaps including government debt, and local currency and dollar deposits, which managed to attract foreign reserves and helped to support the country's dollar-pegged currency. ^[24]

During the 2019–2020 Lebanese protests, Salameh had a feud with the Prime Minister Hassan Diab, as the government decided to default on its foreign obligations, but Salameh preferred to keep using foreign reserves to pay interest to international creditors. ^[25]

Other positions

Salameh chairs the Banque du Liban Central Council, the Higher Banking Commission, ^[26] the AML/CFT Special Investigation Commission ^[19] and the Capital Markets Authority. ^[27] Salameh is a member of the board of governors at the International Monetary Fund (IMF) and at the Arab Monetary Fund (AMF).

Controversies

Ponzi scheme allegations

Following the 2019–20 Lebanese protests, the Banque du Liban deposits declined by $31bn in one year, and the loan portfolio of lenders fell by $18bn, thus putting the country in its first financial crisis in three decades. The governor of the Central Bank of Lebanon, who has benefitted from an aura of prestige during 30 years, often referred to as the "magician" of finance, was, since March 2020, associated with this financial crisis by several opinions pages, such as An-Nahar and Bloomberg. According to them, Riad created a Ponzi scheme which has lasted for 30 years and which has led the State into bankruptcy and the national currency fall. ^{[28] [29] [30] [31] [32] [33] [34]} French president Emmanuel Macron made the same comparison, calling for more transparency in the Lebanese financial system. ^{[35] [36]}

The governor answered those allegations that "the interest rates paid in Lebanon were lower than those paid in Egypt and Turkey." Also, he believes that he is "taken as a scapegoat." ^[37]

Other allegations

In July 2020, a group of Lebanese lawyers formally accused Salameh of various crimes, including the embezzlement of central bank assets, and the mismanagement of public funds. ^[38] On 20 July, Lebanese judge Faisal Makki ordered a protective freeze on some of Salameh's assets after ruling in favor of a complaint that he had allegedly undermined the financial standing of the state. ^{[39] [38]}

In August 2020, the Organized Crime and Corruption Reporting Project (OCCRP) reported that offshore companies owned by Salameh had overseas assets worth nearly US$100 million, primarily real estate, mostly in the United Kingdom, and also in Germany and Belgium. ^[38]

At the end of December 2020, Riad Salameh, pointed out by some of the demonstrators, announced the opening of an ethical investigation. The inquiry is to audit the country's financial system and to verify whether political figures have used their position to override banking restrictions on foreign currency withdrawals and transfers of funds abroad. ^{[40] [37]}

In 2021, France and Switzerland opened investigations regarding money laundering by Salameh. ^[41]

He was sanctioned by the United States in August 2023. ^[42]

Trial

In February 2022, a subpoena was issued by Judge Ghada Aoun after Riad Salameh failed to show up to court for questioning, while his whereabouts were unknown after a raid in his office and 2 homes, as part of an investigation for alleged misconduct and corruption. ^{[43] [44]} This sparked controversy with another security agency that was accused of protecting him from trial. Later in 21 March, Salameh along with his brother Raja were charged for illicit enrichment by Ghassan Oueidat but also failed to attend for questioning. ^[45] His brother, Raja Salameh spent a month in detention but was released on 22 May while on a record bail of 100 billion LBP. ^[46] Together with Rajah, he is suspected setting up a money laundering scheme inside the Lebanese central bank through a 0.38% commission imposed by a shell company. ^[47]

On 21 June 2022, his home was raided again by Lebanese security forces. ^[48]

In February 2023, Riad Salameh was charged with money laundering, embezzlement and illicit enrichment, following an 18-month investigation into allegations that he and his brother embezzled $300m from the Banque du Liban between 2002 and 2015. ^[49]

In May 2023, Lebanon received a red notice from Interpol issued against Riad Salameh. The red notice is an international arrest warrant for Salameh for "money laundering, fraud and participation in a criminal association with a view to committing offences [...]", which was issued by a French judge on 16 May after "he failed to show up for a Paris court hearing". ^[50] On 23 May, a second Interpol red notice was issued against Salameh by Germany for "corruption charges, including forgery, money laundering and embezzlement". ^{[51] [50]} Salameh is the subject of multiple criminal investigations for financial wrongdoings, in both Lebanon and Europe. ^[52]

Personal life and family

Salameh is married to Nada Karam, a Lebanese business women who has also been investigated for money laundering and illicit enrichment, and together have 4 children. ^[53] His nephew is Emile Salameh who has been charged by the French authorities with criminal conspiracy, money laundering and receiving stolen goods. ^[47]

References