Leaked documents revealed that Lebanon’s politicians, bankers, and bankers had accumulated wealth offshore and used it to purchase expensive properties. This was a shocking revelation for millions of Lebanese who were caught in the worst economic crisis in decades.
Some of the new offshore account holders belong to the same ruling class that is being blamed in the collapse and derailment of the lives of ordinary Lebanese. They have lost their savings and are now unable to access fuel, electricity, and medicine.
The leaked documents reveal that the long-serving central bank governor was a key figure in the failures that led to the financial crisis.
The documents were referred to as the “Pandora Papers” and were first examined by the International Consortium of Investigative Journalismists. The ICIJ report exposes offshore secrets of wealthy elites in more than 200 countries.
This was done after reviewing nearly 11.9million records from 14 companies that offer services in setting up offshore businesses and shell companies. Many clients of these firms try to conceal their wealth and financial activities.
Although it is legal to set up an offshore company, many Lebanese find this disturbing.
These papers reveal how the political class sent wealth overseas for many years while urging people to save money in Lebanon’s banks. Alia Ibrahim, a Lebanese journalist, stated that this was because they were confident it would be safe.
Ibrahim, cofounder of Daraj (a Beirut-based independent media platform) said that “we are not talking about regular people.” He was also one of many journalists who collaborated with ICIJ in the investigation into the documents.
She said, “These are politicians who have served for many years in public office and are partially responsible for the current crisis Lebanon’s going through.”
The World Bank describes the current economic crisis in Lebanon as one of the worst in 150 years. The crisis which began in late 2019, and has lasted more than a decade, saw 70% of the population fall into poverty. Their savings were almost wiped out.
In late 2019, hundreds of thousands protested against corruption across the country. Two years later, the same politicians continue to run the country the same way as they did in 2019, protected by the sectarian system.
Samir Skaff, one of the protesters, stated that Lebanese were not surprised to hear that the political class is “made up of a bunch robbers.”
He said, “We have been saying it for years.”
Although not illegal, offshore companies can be used to evade taxes or hide money that has been illicitly earned. Leaks add to the long-held beliefs of Lebanese about their ruling class, despite repeated reports of corruption and illicit activity that have not brought about change.
Trident Trust is one of 14 companies that ICIJ has listed as offering offshore services. Its 346 Lebanese customers make up the largest part, more than twice the number in Britain.
Riad Salameh is the central focus of these revelations, having been Lebanon’s central banking governor for almost 30 years.
Daraj stated that documents show Salameh established a company called AMANIOR in 2007, based in British Virgin Islands. Daraj stated that he is listed as the sole owner and sole director of the company. This appears to be in violation of Lebanese laws which prohibit the central bank governor’s activity in any business.
According to Salameh’s bureau, the central bank governor had no comment on the documents. According to ICIJ, he stated that he declared his assets and had fulfilled the reporting requirements under Lebanese law.
Salameh, aged 70, is under investigation in France and Switzerland for possible money laundering and embezzlement. Local media has reported that Salameh, his brother and one of his aides were involved in illegal business dealings. These included money transfers abroad despite capital controls at home. Salameh denied that he made such transfers.
Another document showed that Marwan Kheireddine (chairman of Lebanon’s Al-Mawarid Bank) was involved in the creation of a number of offshore businesses just before the financial crisis of late 2019. His bank, along with others, began capital controls in November of that year. This meant that Lebanese could not withdraw much money from their accounts even though the currency crashed. It also destroyed their savings.
According to the Pandora Papers, Kheireddine was granted control of an offshore company in the British Virgin Islands in 2019. He then used that money to purchase a $2 million yacht.
He and his brother established four British companies on the same day in January 2019. They were all located at the same London address and registered as “small businesses,” which Daraj stated meant that they are exempted from auditing. According to Lebanese media, Kheireddine purchased a New York penthouse worth $9.9 million from Jennifer Lawrence in 2020.
Kheireddine, a former cabinet minister and senior member of Lebanese Democratic Party, is no longer available for comment. The AP did not reach him with calls or a text message.
Since the 1990s, Prime Minister Mikati has been a Panama-based businessman. Daraj revealed that he used the money to purchase property in Monaco for more than $10million in 2008.
Leaked documents also reveal that Maher’s son was a director at least two British Virgin Islands-based businesses, which Maher’s father’s Monaco-based M1 Group used to get an office in central London.
Mikati issued a statement stating that his family fortune was built before he became involved in politics. He was also “compliant with international standards” and was regularly inspected by auditors. Mikati’s media advisor Fares Gemayel, who was contacted by the AP, said he didn’t have any comment.
Maher Mikati, speaking to Daraj, stated that it is common for people in Lebanon use offshore companies “due the easy process of incorporation”, and denied that the purpose was to evade tax.
Mikati’s predecessor, Hassan Diab as prime minister was co-owner of a British Virgin Islands shell company, Daraj reported.
Diab’s office released a statement Monday saying that Diab helped to establish the company in 2015. However, it failed to do business. Diab resigned and gave up his shares.
The statement stated that “Is the establishment of a company against law?”
After a devastating Aug. 4, 2020 blast in Beirut, which left hundreds dead and many more injured, Diab’s government resigned. In the case, Diab was accused of intentional killings as well as negligence. Although denying any wrongdoing, he refused to answer questions by the investigator.