Salame has been investigated for embezzlement and money laundering in several European countries, but on Tuesday, he was detained over his alleged connection to a small brokerage firm potentially involved in suspicious transactions worth US$8 billion.
It was Salame’s first appearance before a Lebanese judge since his term as central bank chief ended on July 31, 2023. He showed up at the court dressed in a dark suit and tie but without a lawyer.
The case will be “referred to the investigative judge at the Beirut Court of Cassation, who will take the appropriate measures against him, including what might be an arrest warrant,” the country’s acting public prosecutor, Jamal Hajjar, said in an interview with the Lebanese Broadcasting Corporation, widely known as LBCI.
Hajjar’s interrogation focused on Salame’s dealings with Optimum Invest SAL, Lebanon’s official news agency (NNN) said, referring to the boutique firm that offers several income brokerage services, according to its website and LinkedIn account.
Optimum had allegedly dealt with the central bank governor to buy and sell treasury bonds and certificates worth around $8 billion, in what is known in the financial world as “round-tripping” — the practice of performing transactions between two or more companies solely to boost income flows.
This was apparently done to hide the bank’s substantial losses.
The scheme was revealed by a financial audit conducted by Kroll in 2023, a copy of which was obtained by OCCRP. The audit was requested by a prosecutor.
Optimum did not respond to Daraj’s request for comment.
An undated statement on the broker’s website said that the audit leaked to the media contained “no evidence of wrongdoing or illegality” in the company’s dealings with Lebanon’s central bank.
But Toufic Gaspard, a prominent Lebanese economic expert, called on Lebanon’s acting central bank chief to investigate the fate of the $8 billion.
“Kroll’s report is the most important as it shows there were internal transactions conducted by the central bank through Optimum,” he said in an interview with Daraj.
“These transactions came at the request of the central bank, which determined their value and all selling and purchasing prices, as well as the profits resulting from these transactions,” Gaspard added.
All the trading was conducted outside the financial market and was only registered by the central bank, he said.
“In a few months, these transactions generated $8 billion in profits for the central bank. It is not known where these profits were spent and under which budget item they were recorded,” he said.
“All of these operations are suspicious and border on fraud, especially considering that the central bank carried them out,” Gaspard concluded.
A senior security source, speaking on condition of anonymity because he is not authorized to talk to reporters, told OCCRP that “Salame is now like any other prisoner who stays at the General Security Department, which is a legal prison like any other.”
Chanez Mensous, Advocacy and Litigation Manager at Sherpa, an NGO that tackles illicit financial flows, welcomed Salame’s detention as “a positive signal” that could lead to his extradition and legal proceedings in France.
Salame has been investigated by prosecutors in several European countries where he is suspected of having embezzled Lebanese public funds and having laundered them through real estate and offshore bank accounts.
The European Union Agency for Criminal Justice Cooperation (Eurojust) in 2022 froze assets worth 120 million euros tied to Salame, including several properties previously exposed by OCCRP.
U.S., Canadian, and U.K. authorities sanctioned Salame and several associates last year, just days after his tenure as governor ended.
“Salame abused his position of power, likely in violation of Lebanese law, to enrich himself and his associates by funneling hundreds of millions of dollars through layered shell companies to invest in European real estate,” the U.S. Treasury said in its announcement.
His “corrupt and unlawful actions have contributed to the breakdown of the rule of law in Lebanon,” it added.
