BEIRUT: A wealth of leaked documents have confirmed that for years Lebanese politicians and bankers have stored wealth in offshore tax havens and used it to buy expensive properties.
An infuriating revelation for masses of newly impoverished Lebanese caught in one of the world’s worst economic collapses in decades.
Some of the new offshore account holders are from the same ruling elite who are blamed for the collapse and derailment of the lives of ordinary Lebanese who have lost access to savings and are now struggling to obtain fuel, money. electricity and medicine.
Names in bold in the leaked documents include the longtime central bank governor, a central figure in the failed policies that helped trigger the financial crisis, as well as Prime Minister Najib Mikati and his predecessor.
The documents, dubbed “Pandora Papers”, were reviewed by the International Consortium of Investigative Journalists, with initial findings released on Sunday. The ICIJ report exposes the offshore secrets of wealthy elites from more than 200 countries and territories.
It was based on a review of nearly 11.9 million records obtained from 14 companies that provide services for the establishment of offshore companies and shell companies. The clients of these companies often try to hide their wealth and financial activities.
Setting up an offshore company is not illegal, but reinforces the perception that the rich and the powerful play by different rules – a notion that is particularly upsetting for many Lebanese.
Newspapers show how members of the political class sent wealth abroad for years, even as they urged people to deposit money in Lebanese banks, assuring them that it was safe, said Alia Ibrahim, a Lebanese journalist.
“We are not talking about ordinary citizens,” said Ibrahim, co-founder of Daraj, an independent Beirut-based digital media platform, and one of the many journalists from around the world who have worked with the ICIJ on investigation of documents.
“These are politicians who have held public office for years, and they are partly responsible for the current crisis in Lebanon,” she said.
Lebanon is in the midst of what the World Bank says is one of the world’s worst economic collapses in the past 150 years. Over 70% of the population has been plunged into poverty, their economies almost wiped out in the crisis that began in late 2019 and was in part caused by decades of corruption and mismanagement from the political class.
Hundreds of thousands of people have staged nationwide anti-corruption protests from late 2019. Yet two years later, the same politicians still run the country the same way, protected by the sectarian system.
One of the protesters, Samir Skaff, said the Lebanese are not surprised to learn that the political class “is made up of a bunch of thieves”.
“We’ve been saying this for years,†he said.
Offshore companies, while not illegal, can be used to evade taxes or hide illegally earned money. The leaks only add further confirmation to what the Lebanese have long been saying about their ruling class – although repeated reports of corruption or illicit activity in the past have failed to bring about change.
One of the 14 companies listed by the ICIJ as providing offshore services is Trident Trust, with 346 Lebanese clients making up the largest group, more than double the second country, Britain.
One of the focal points of the revelations is Riad Salameh, who served as governor of Lebanon’s central bank for nearly 30 years.
Daraj reported that the documents showed that Salameh founded a company called AMANIOR, based in the British Virgin Islands, in 2007. He is listed as its full owner and sole director, which Daraj says appears to violate the laws. Lebanese prohibiting the governor of the central bank from exercising his activities in any company.
Salameh’s office told The Associated Press that the central bank governor had no comment on the documents. The ICIJ quoted him as saying that he was declaring his assets and had complied with reporting obligations under Lebanese law.
Salameh, 70, is under investigation in Switzerland and France for money laundering and embezzlement. Local media have reported in recent months that Salameh and his brother as well as one of his collaborators have been implicated in illegal ventures, including money transfers abroad despite the capital controls imposed in the country. Salameh had denied having made such transfers.
Other documents showed that Marwan Kheireddine, president of Lebanese bank Al-Mawarid, was involved in creating a wave of offshore companies in the months leading up to the economic crisis at the end of 2019. In November of the same year, his bank and others began to tax capital. controls that meant the Lebanese could withdraw very little money from their accounts even as the currency collapsed, destroying the value of their savings.
The Pandora Papers reveal that in 2019, Kheireddine took control of an offshore company in the British Virgin Islands, which he then used to buy a $ 2 million yacht.
In January 2019, he and his brother set up four companies in Britain on the same day, all based at the same address in London, and all registered as ‘small businesses’, which Daraj said meant that they were exempt from audit. In 2020, Kheireddine bought a $ 9.9 million New York penthouse sold by American actress Jennifer Lawrence, Lebanese media reported at the time.
Kheireddine is a former Cabinet Minister and a prominent member of the Lebanese Democratic Party. He did not respond to calls and text from the AP.
Prime Minister Mikati, a businessman who formed a new government last month, has owned a Panama-based offshore company since the 1990s. He used it in 2008 to buy property in Monaco from worth more than $ 10 million, Daraj reported from the documents.
The leaked documents also show that his son Maher was a director of at least two companies based in the British Virgin Islands, which his father’s Monegasque company, M1 Group, used to secure an office in central London.
Mikati issued a statement saying his family fortune was amassed before his involvement in politics and was “up to global standards” and regularly reviewed by auditors. Contacted by the AP, Mikati’s media advisor Fares Gemayel said he had made no comment.
Speaking to Daraj, Maher Mikati said it was common for the Lebanese to use offshore companies “due to the easy incorporation process” and denied that the purpose was to avoid tax.
Mikati’s predecessor as Prime Minister Hassan Diab was part-owner of a shell company in the British Virgin Islands, Daraj reported.
Diab’s office said in a statement on Monday that it helped start the company in 2015, but did not do any business and resigned from the company and relinquished its shares in 2019.
“Is setting up a business illegal? The statement said.
Diab’s government resigned days after a massive explosion on August 4, 2020 in Beirut that killed and injured hundreds and destroyed the city‘s port and neighboring neighborhoods. Diab has been charged with intentional murder and negligence in this case. He denies any wrongdoing but refused to be questioned by the investigating judge.
