Former head of Lebanon’s central bank, Riad Salameh, was arrested for alleged financial crimes.

By Laila Bassam, Timour Azhari and Maya Gebeily

BEIRUT (Reuters) – Former Lebanese central bank governor Riad Salameh was arrested in Beirut on Tuesday on suspicion of financial crimes linked to a brokerage firm, three judicial sources said, his first arrest after years of accusations at home and abroad.

Salameh, 73, served as governor of the bank for 30 years, but his final years were marred by charges of financial crimes, including illicit enrichment with public funds, brought by authorities in Lebanon and several Western countries.

Two judicial sources told Reuters that the former central bank chief is accused of amassing more than $110 million through financial crimes related to Optimum Invest, a Lebanese company that provides income brokerage services.

According to a source, the specific charges that led to his arrest on Tuesday were embezzlement, money laundering and fraud relating to commissions the central bank earned from dealings with Optimum between 2015 and 2018.

Neither Salameh nor his lawyer immediately responded to requests for comment. Salameh has previously denied any allegations of financial crimes.

He will be held in “precautionary detention” for four days before the case is handed over to the public prosecutor's office in Beirut, another judicial source said.

Optimum CEO Reine Abboud told Reuters by phone that the company was not present at the hearing and learned of the arrest through local media.

Abboud referred to Reuters a statement on Optimum's website saying that a financial audit in late 2023 had found “no evidence of wrongdoing or illegality” in the company's dealings with the central bank.

Tuesday's indictment is unrelated to previous financial crimes charges related to Forry Associates, a company controlled by Salameh's brother Raja. The brothers – who deny any wrongdoing – were accused of using Forry to embezzle $330 million in public funds via kickbacks.

Although charges were brought against him in Lebanon, arrest warrants were in place in France and Germany, and an Interpol Red Notice was issued against him, Salameh had never been arrested before.

If the case goes ahead, it would be a rare example of Lebanese authorities holding a senior politician accountable in a system that critics say has long shielded the elite.

Caretaker Prime Minister Najib Mikati told the pan-Arab broadcaster Al-Hadath that the government would not intervene in the case.

Salameh worked closely with Lebanon's leading politicians throughout his term in office, leading critics to question whether the Lebanese judiciary – whose appointments depend largely on political support – would seriously investigate him.

UNDER SANCTIONS

Two of the judicial sources told Reuters that Salameh was arrested following a hearing at Lebanon's Palace of Justice about the central bank's dealings with Optimum Invest.

They said Optimum worked with Lebanon's central bank to buy and sell government bonds and certificates of deposit with high turnover rates, making huge profits.

Lebanese Justice Minister Henry Khoury told Reuters he had no further information on the file.

“There is no doubt that the prosecutor did his duty and interrogated former governor Riad Salameh,” he said.

After taking the helm of the central bank following a devastating 15-year civil war, Salameh earned a reputation as a competent administrator of the financial system and was once considered a possible president.

After he left office, the United States, Great Britain and Canada announced sanctions against him and accused him of corruption to enrich himself and his staff – allegations that he also denied at the time.

His downfall is a reflection of Lebanon's financial system, which collapsed five years ago and now faces an assessment by a financial regulator in the coming weeks that could place the system on a “grey list” requiring closer scrutiny.

One of the biggest gaps identified by the Financial Action Task Force was the lack of judicial action on suspected financial crimes.

Diplomatic and legal sources said they viewed Salameh's arrest as a possible attempt to show FATF assessors that something was now being done.

(Additional reporting by Tala Ramadan in Dubai; Writing by Maya Gebeily; Editing by Tom Perry, Andrew Heavens, William Maclean, Angus MacSwan and Alex Richardson)