BDL files new criminal complaints targeting former private banking executives

Lebanon’s Banque du Liban (BdL) filed two new criminal complaints targeting former executives at the country’s two biggest private banks, alongside its former Governor Riad Salameh. BdL did not name the defendants, but Lebanon’s French daily L’Orient identified them as former Bank Audi CEO Samir Hanna, former GroupMed chairman and BankMed CEO Mohammad Ahmad Hariri, former BankMed executive general manager Mohammad Ali Beyhum, and investor Alaa Al Khawaja, who acquired a 42% stake in BankMed’s parent company in 2017.

The central bank said the defendants “exploited their positions … to implement a coordinated scheme, premeditated and designed, aimed at transferring funds belonging to Banque du Liban … leading to the squandering of the bank’s funds for the benefit of private material and functional interests and causing serious financial damage to the Bank of Lebanon, its reputation, and the public interest.” The alleged actions could constitute “fraud, breach of job duties, illicit enrichment, embezzlement of funds, bribery, and forming an organized criminal group,” BdL added.

Hanna is already deep in the legal quagmire. He has been under domestic investigation since January, when BDL’s new Governor Karim Souhaid filed a separate complaint alleging illicit enrichment via offshore companies in the Cayman Islands. France’s National Financial Prosecutor has opened a parallel probe into a suspected USD 154 mn fraud involving Bank Audi, Hanna, and Salameh. Hanna has since resigned as Bank Audi CEO.

But the inclusion of the BankMed executives and Al Khawaja is new. It marks an expansion of BDL’s legal pursuit to come after more names in the private-banking network that allegedly facilitated the scheme that ultimately culminated in the collapse of the country’s banking sector — not just pursuing Salameh alone.

The thread connecting Bank Audi, BankMed, and Khawaja runs through a 2017 transaction. Al Khawaja — a Jordanian-Palestinian-Lebanese businessman, confidant of former PM Saad Hariri, and owner of Egypt-based production and distribution house Al Arabia Cinema — bought Ayman Hariri’s 42.24% stake in GroupMed, BankMed’s sole parent company, for USD 535 mn. But according to an investigation by the left-leaning, independent Lebanese outlet Daraj, the transaction was financed by a loan from Bank Audi — and BDL had granted Audi a matching, uncollateralized loan of c. USD 550 mn at the same time. Daraj’s sources said Khawaja never repaid the loan, and that the transaction may have breached Lebanon’s Code of Money and Credit.

BDL was careful to shield the banks, stating the complaints “are directed exclusively against the natural persons who committed these acts, and do not target in any way the commercial banks in which they worked.” The central bank said its goal is “financial justice” and recovering stolen funds for depositors rather than prison sentences.