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As corruption probes converge, support for Lebanon cbank governor frays - sources

As corruption probes converge, support for Lebanon cbank governor frays - sources

Top-level political backing for Lebanon's central bank governor Riad Salameh is starting to fray, political sources say, as the veteran financier once hailed as a banking wizard faces several corruption investigations in the waning months of his tenure.

The apparent cooling of support raises questions over the impact the investigations could have on the wider political class, given the widely-held view that members of the ruling elite fear his downfall would have repercussions for them.

Salameh, 72, has been summoned for a hearing on Wednesday as part of Lebanon's probe into whether he and his brother embezzled hundreds of millions of dollars in public funds, a claim at least five European countries are also investigating.

He denies the charges and says they are part of an attempt to scapegoat him for Lebanon's historic financial crisis, which has destroyed the savings of generations since 2019.

Many blame Salameh along with ruling politicians, whose interests he long served as steward of the financial system.

Viewing Salameh as a burden, some of his long-time allies are now distancing themselves from him, say political sources, who declined to be identified due to the sensitivity of the subject.

Salameh, governor for three decades, said in February he would not seek a new term once his current one ends in July.

His departure will mark a milestone in the financial meltdown which resulted from decades of profligate spending, corruption and unsustainable financial policies by leaders who have left the crisis to fester since 2019.

Once a regular at banking summits and chic restaurants in Europe, he now restricts his movements and is rarely seen in public, except for semi-regular television interviews defending his record.

Concrete t-walls surround the central bank building in Beirut, covered in anti-Salameh graffiti. He is living in a secured apartment inside and rarely leaves, according to a source close to him who has visited him.

To attend a meeting at the government's headquarters, he was sent an armoured car, brought into the premises through a secret door and left quickly before news of his presence spread, a source with knowledge of the meeting said.

Another source with knowledge of Salameh's interactions with the political elite said he had been "very tense recently". A close friend said he was seriously considering leaving Lebanon once his term ends.

"He'll either go to the Gulf or Europe," the close friend said, adding that Salameh was confident European investigators would eventually clear him of wrongdoing.

Salameh did not respond to questions from Reuters on the sources' accounts of his isolation.


'HE IS THE DOMINO'


European officials have not yet questioned the Salamehs directly and have not filed formal charges. Raja has also denied any wrongdoing.

They will be allowed to attend Wednesday's hearing in Lebanon, where a judge charged the Salameh brothers with financial crimes last month.

But critics have long doubted whether ruling politicians, who exercise major sway over the judiciary, would allow him to be prosecuted in Lebanon: Salameh has been the linchpin of a financial system from which they benefited for decades.

"He is the domino. If he falls, everything falls," said the source with knowledge of Salameh's political ties.

"He knows most of their financial secrets," wrote Ibrahim Al-Amin, editor of al-Akhbar newspaper, which has long been critical of Lebanon's financial policies.

Salameh has worked hand-in-glove since 1993 with powerful figures including the Shi'ite Parliament Speaker Nabih Berri and a series of Sunni prime ministers, among them Saad al-Hariri.

A long-term occupant of a post reserved for a Maronite Christian in Lebanon's sectarian power-sharing system, he has also enjoyed the backing of Christian religious authorities.

But there are signs his political backing is waning.

Prime Minister Najib Mikati, a billionaire businessman, told local broadcaster Al-Jadeed he would not propose an extension of Salameh's term. "(Salameh) doesn't want to (continue), and for us I believe it is difficult," he said.

A political source said Mikati would no longer back him. "It's over for Riad Salameh," the source said. Mikati's office declined to comment and referred Reuters to the Al-Jadeed interview.

A source from the Amal Movement, headed by Berri and seen as one of Salameh's main traditional backers, said if Salameh is involved in corruption, he should be tried fairly.

"We never cover anyone," the source added.

Lebanon's powerful Hezbollah has said it is against a term extension.

"The politicians for whom he did so much now see him as a burden, and they are distancing themselves from him little by little," a second political source said.

In January, the U.S. Treasury sanctioned a Lebanese money exchanger over alleged ties to Hezbollah, saying he had advocated for his exchange firm to the central bank governor.

Two bankers said the reference to Salameh's post was seen as a message from Washington that he was "not untouchable."

Salameh's enforcement of U.S. laws targeting Hezbollah finances had helped win supporters in the West. The U.S. Treasury declined to comment.

"It would be wise for him not to stay on" when his term ends, a Western diplomat said.

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