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Swiss investigations discovered that Forry was a fraudulent enterprise registered in the British Virgin Islands to conceal Raja Salameh's identity.
This article was translated from Arabic.
Judicial delegations from France, Germany, and Luxembourg visited Beirut, the capital of Lebanon, in January 2023.
These delegations sought to conduct investigations into allegations of money laundering, embezzlement, and illicit enrichment by the governor of the Lebanese Central Bank, Riad Salameh, according to the requests for judicial cooperation issued by these nations to Lebanon.
The delegates’ main objective was to question a number of witnesses who, as a result of their positions, are in possession of information or data pertinent to the case.
Forry’s company profile
These investigations are primarily centered on looking into “Forry Associates Limited,” a company incorporated in the British Virgin Islands. Authorities in Europe suspect that the governor of the Central Bank and his brother used this firm to embezzle Lebanese public funds through European banking systems and real estate markets.
The amount in question, nearly $330 million, was transferred in stages from the Central Bank of Lebanon to Switzerland. Further investigation revealed that the funds were distributed from Switzerland to a complex network of bank accounts and companies owned by partners of Riad Salameh in an effort to conceal their primary origin.
The affair began in April 2001 when “Forry,” a vague and unknown company, and Salameh, Governor of the Banque du Liban, came into a financial mediation agreement. In accordance with this agreement, Forry was permitted to represent the Central Bank in the selling of Eurobonds and deposit certificates to commercial lenders.
Salameh authorized the retention of a 0.375 percent commission on the total amount of Eurobonds and certificates of deposit that banks acquired from the Central Bank between 2002 and 2015, according to the agreement.
The deal initially raised no questions, but subsequently, investigative reporters were able to obtain more information about the company’s Swiss accounts from 2015 to 2019. Raja Salameh, who just so happens to be the brother of the governor of the Banque du Liban, was found to be the underlying owner of the company.
Following the 2019 financial meltdown in Lebanon, a number of European human rights organizations petitioned Swiss courts to look into a particular company’s operations and the sizeable transfers it had received to its European accounts. In November 2020, Lebanon received its first request for judicial cooperation from the Swiss judiciary, which has since been investigating the matter. In the correspondence, Switzerland requested information pertaining to the accounts of the Banque du Liban governor and his brother, as well as their financial dealings.
Swiss investigations quickly discovered that Forry was a fraudulent enterprise that had been registered in the British Virgin Islands to conceal Raja Salameh’s identity. It was discovered that the company was set up mere months before signing a contract with the Central Bank. Given the lack of justification for selecting this new company as an agent for Banque du Liban, to the exclusion of other companies, investigators started to suspect potential abuse of power by the governor of Banque du Liban.
It was later revealed that the commercial banks that bought bonds and certificates of deposit between 2002 and 2015 were not familiar with Forry and had never done business with it. This indicated that the questionable company did not actually act as a mediator for the Central Bank.
Furthermore, it was found that Forry lacked a license to engage in financial brokerage and did not have any employees working through its operational center, which remained empty during its years of operation. Furthermore, there was no indication of Forry’s involvement in the agreements between the Central Bank and banks regarding the purchase of Eurobonds and certificates of deposit.
To put it more plainly, Forry was a fictitious company that was improperly collected hundreds of millions of dollars in commissions from Banque du Liban for services that were never provided and mediation that was never conducted. The information provided by the Swiss Federal Public Prosecution to the Lebanese judicial system demonstrates how this led to allegations of theft and illicit wealth accumulation in Swiss courts.
Since the 1990s, the Central Bank hasn’t required intermediaries in its dealings with commercial banks since the latter are acquiring financial products directly from the institution. The agreement between Forry and the Central Bank was only a front for the bank to transfer $330 million to Forry’s Swiss bank accounts.
The judicial system has been maintaining a close eye on money-laundering activities in Europe since 2021, with a particular focus on the financial systems of France, Germany, Luxembourg, Liechtenstein, and Belgium. As a consequence, criminal investigations were launched in these nations.
The European Union’s Criminal Judicial Cooperation Agency (Eurogast) has coordinated these investigations with the aim of tracing the flow of these funds. In March 2022, the investigations culminated in the freezing of $120 million worth of assets and funds belonging to the governor of Banque du Liban and his associates, who are believed to be implicated in money laundering operations.
Lebanon is forced to cooperate with European investigations
To date, the governor of Banque du Liban remains in office due to the protection provided by the overwhelming majority of Lebanese political leaders. The Public Prosecution Office of Appeal in Beirut has yet to bring a case against the governor despite the existence of an integrated Lebanese criminal investigation into this matter that was concluded by an investigative judge in Lebanon.
Similar to the inquiry into the Beirut Port explosion, the prosecution of Salameh was impeded by the abuse of bureaucratic processes, which led to lengthy suspensions for the involved judges.
However recently, Lebanon was obligated to cooperate with European investigations by providing the required information to European investigators and scheduling witness hearings in Beirut. The United Nations Convention against Corruption was ratified by Lebanon in 2009, and according to Lebanese law, it has greater legal authority than local laws. This agreement requires Lebanon to provide the highest level of legal assistance in response to requests from European countries for judicial cooperation.
According to the European judicial authorities’ investigations, the suspected embezzled public funds are of Lebanese origin, which would typically fall under the jurisdiction of the Lebanese judiciary.
However, since the process of money laundering, aimed at concealing the funds’ origin, was conducted through European banks and real estate markets, the investigation of these suspicions is also within the jurisdiction of the courts of European countries where the money laundering operations took place. It is worth mentioning that money laundering, as a standalone crime, is universally recognized and has no correlation with the identity of the embezzled funds or their source.
Due to these factors, the highest level of public prosecutors in Lebanon, the Public Prosecutor at the Court of Cassation, acceded to the requests of European investigators by agreeing to host them and granting access to the information they requested from the Lebanese side.
According to the judicial cooperation procedures adopted by Lebanon, the Lebanese judiciary arranged for the witnesses to be interviewed in the presence of the European delegation and under the guidance of Lebanese judges. Upon completion of their visit, the European public prosecution offices will continue with their investigations, leading to the eventual prosecution of Riad Salameh in this matter.
The fundamental issue, despite ongoing European probes, remains Lebanon’s legal stagnation, which prevents the government from recovering the stolen public funds stashed in Europe.
The Lebanese Ministry of Finance bears a portion of the blame for this predicament for not having assigned a state attorney to represent Lebanon’s rights and oversee investigations both in Lebanon and in Europe.
Due to inaction, the recently seized laundered funds may be confiscated by European nations rather than returned to Lebanon as stolen public funds. The political class’s attempt to defend the governor of the Central Bank of Lebanon and those who participated in the theft of public funds will most certainly come at a cost.