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US Denies Report of Potential Sanctions on Lebanese Central Bank Chief

US Denies Report of Potential Sanctions on Lebanese Central Bank Chief

Friday, 5 March, 2021 - 14:45
Lebanese Central Bank Governor Riad Salameh | Photo: REUTERS

A US State Department spokesperson denied on Friday that Washington was weighing sanctions against Lebanon's long-serving Central Bank Governor Riad Salameh.

"We have seen reports about possible sanctions on Riad Salameh. They are untrue," Reuters quoted the spokesperson as saying.

A Bloomberg report on Thursday said the United States was considering sanctions against Salameh amid a broader investigation into the alleged embezzlement of public funds, citing four people familiar with the matter.

Salameh, 70, was once celebrated as the financier who stabilized Lebanon’s currency against all odds and was even considered at one time to be a presidential contender. As recently as 2019, he earned an A-grade from the New York-based magazine Global Finance in its annual rankings. Euromoney named him central bank governor of the year a decade earlier.

A household name on Wall Street and in foreign capitals, Salameh has been one of the few constants over the past three decades as Beirut wrestled with war, debilitating political standoffs, and an economic meltdown.

That backdrop sparked mass protests in October 2019 against a political class accused of bleeding state coffers through decades of corruption and mismanagement. Demonstrators also blamed Salameh for ever-riskier policies to sustain a financial model that ultimately failed, wiping out the life savings of a generation of Lebanese. More than half the population now lives in poverty, according to the United Nations.

In January, the Swiss attorney general’s office asked the Lebanese government for help with an investigation into money laundering linked to possible embezzlement from the coffers of Banque du Liban, as the central bank is known. Swiss authorities didn’t identify the target of their probe and the Lebanese judiciary said it had been approached about transfers abroad made via the central bank.

The investigation also involves other jurisdictions, including the UK and France, where authorities are reviewing Salameh’s links to properties, shell companies, and overseas bank transfers, the four people said. While the Swiss probe lends momentum, potential American sanctions don’t necessarily depend on its outcome as much as on shifting political calculations, they said.

Salameh dismissed the allegations made against himself and the central bank.

“It is utterly untrue that I have benefited in any way or form, directly or indirectly, from any funds or assets belonging to BDL or any other public funds,” he wrote in an emailed response on Thursday to questions from Bloomberg News.

Salameh said his net worth was $23 million when he took on the role of governor in 1993, a fortune amassed during his previous career as a private banker. His salary at Merrill Lynch was $165,000 a month, he said.

“The source of my wealth is clearly identified,” he wrote in the email.

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