From the Organized Crime and Corruption Reporting Project, March 15:
Prosecutors in Lebanon and Europe are investigating the longtime Banque du Liban governor, Riad Salame, for suspected money laundering and corruption. He’s also been blamed for the country’s financial crisis. But Salame claims he is a scapegoat.
Riad Salame is one of the longest serving central bank governors in the world. He has helmed the Banque du Liban for nearly three decades, joining it in 1993 after a career as an investment banker for Merrill Lynch in Paris and Beirut.
For years, Salame was portrayed as something of a miracle worker, helping establish relative economic stability after Lebanon’s 1975-1990 civil war. Annual inflation fell from a postwar peak of nearly 100 percent in 1992 to just 0.2 percent in 1999. By 2008, credit ratings agency Moody’s had upgraded Lebanon to “positive.” A year later, The Banker, an industry magazine, named Salame the Middle East’s “central banker of the year.”
But Salame’s record has faced growing scrutiny since Lebanon’s financial system imploded in late 2019. Critics have accused him of severe economic mismanagement, while investigations into suspected money laundering have brought European prosecutors to Beirut.
In just around three years, many of the gains seen under Salame have been wiped out. Lebanon’s currency has lost more than 95 percent of its value against the dollar, hundreds of businesses have shuttered, and thousands of jobs have disappeared while commodity prices continue to surge.
“Most Lebanese are suffering, even if some continue to make huge profits,” said Alia Ibrahim, co-founder and chief executive officer of OCCRP partner Daraj. “In most of Lebanon, the situation is one of the worst Lebanon has ever known.”
Why Is Riad Salame blamed for Lebanon’s economic crisis?
In a glowing 2008 BBC News article, Salame claimed his “very conservative” monetary system had been “tested against wars, against instability, against political assassinations.”Fast-forward to today, and many economists — and ordinary Lebanese — now blame Salame for the country’s spectacular collapse.
The World Bank has compared Salame’s fiscal regime to a “Ponzi scheme.” Under the system, the central bank injected U.S. dollars into the economy to maintain a favorable exchange rate for the Lebanese pound compared to the dollar. This kept down the price of imports, upon which Lebanon relies heavily, and helped buoy the country’s middle class....
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