Lebanon central bank under investigation in Switzerland

The Swiss federal prosecutor’s office has opened an investigation into the Lebanese central bank (Banque du Liban).

The Swiss investigation comes amid increased scrutiny of longstanding central bank governor Riad Salamé. There is increasing pressure from France, and from other donor countries to the crisis-hit nation, for an audit of the central bank that has, however, ben repeatedly delayed.

The Swiss office of the attorney general (OAG) said on Tuesday it had requested mutual legal assistance from the Lebanese authorities related to an investigation into money laundering and possible embezzlement tied to Lebanon’s central bank.

“This request comes in the context of an OAG investigation for aggravated money laundering in connection with possible embezzlement to the detriment of the Banque du Liban,” the attorney general’s office said in an emailed statement.

Earlier on Tuesday, Salameh denied any wrongdoing after a Lebanese government official told Reuters the Swiss authorities had opened an investigation into money transfers by him, his brother and an assistant.

In a statement by the Banque du Liban, Salameh said there was no basis to the charges, calling them “fake news.”

Since Lebanon defaulted on its debt in 2019, Salameh has been under pressure for the central bank’s inability to contain the current crisis. The Lebanese pound has lost 80 per cent against the dollar; the country’s economy is dollarised; inflation is at nearly 30 per cent, and about 50 per cent of the country’s workforce is unemployed.

Lebanese banks have imposed de facto limits on withdrawals of hard currency,  and blocked most transfers abroad. All of this has fuelled popular anger as growing numbers of people cannot afford to buy food or pay for housing.

The humanitarian crisis has reached a watershed, as It is estimated that somewhere above 55 per  cent of the population is impoverished. In addition, The Government of Lebanon has confirmed 260,315 cases of Covid-19, and the health system is under extreme pressure.

Lebanon President Michel Aoun initiated the demand for an audit of the central bank.

European authorities are reportedly studying Salameh’s case as part of a file that includes a long list of Lebanese personalities prepared in cooperation with France, Britain and the US, which requested the participation of the EU and demanded that the sanctions are not solely imposed by the US Treasury Department and are not only related to combating terrorist financing.