Belgium (Brussels Morning Newspaper), Half a century ago, a Pakistani financier began the work of building his Bank of Commerce and Credit International (BCCI) into the seventh largest private bank in the world. In just one decade, BCCI had over 400 branches in 78 countries and assets of US$20 billion (US$63 billion today).
Not long afterward, investigations by financial regulators and intelligence agencies found that BCCI was involved in money laundering and other financial crimes and had illegally gained control over a major U.S. bank (First American Bankshares).
Just 19 years after its founding, customs, and bank regulators raided and locked down records at BCCI’s branch offices in seven countries, effectively bringing down the hammer on the institution.
In an elaborate scheme (known as Operation C-Chase) that even involved a fake wedding, U.S. and British customs agents arrested 40 bankers and narcotics traffickers in London and several U.S. cities on money laundering and other charges.
BCCI had tried to obscure the source of laundered monies by rapidly shuffling ill-gotten cash through “a kaleidoscope array of banks and shell corporations” before returning the “cleaned” cash to narco kingpins, including Panama’s General Manuel Noriega and Saudi financier Adnan Khashoggi (uncle of the slain Jamal Khashoggi).
Earlier, BCCI had sought to whitewash its reputation by bankrolling the Third World Foundation, which is said would help “relieve poverty and sickness” in developing nations. The Foundation even created an award, mirroring the Nobel Peace Prize, with Nelson Mandela and former West German Chancellor Willy Brandt among the recipients.
Three decades later, long after its formal demise, BCCI has faded from memory.
Potentially rising to take its place in infamy, however, are Lebanese banks such as the Bank of Lebanon (BDL, the nation’s central bank) and the Société Générale de Banque au Liban (SGBL) – and the now-absorbed (by SGBL) Lebanese Canadian Bank (LCB).
Back in 2011, the Obama Administration had accused LCB of laundering money for an international cocaine ring with ties to Hezbollah. Later, LCB’s ledgers were opened to reveal “deeper secrets: a glimpse at the clandestine methods” that Hezbollah uses to finance its illegal and terrorist operations.
As The New York Times’ Jo Becker reported, the bank and Hezbollah used an intricate global money laundering apparatus that enabled moving huge sums of money into the legitimate financial system in an end run around existing sanctions. Among the revelations, investigators found the link between Hezbollah and the South American cocaine trade.
One agent reportedly commented that Hezbollah operated “like the Gambinos on steroids.”
In the midst of the investigation, which included uncovering a scheme that washed drug money with the proceeds of the sale of American used cars resold in Africa, SGBL agreed to buy LCB’s assets and bank chairman Antoun Sehnaou, wearing the whitest of hats, announced an audit (paralleling that of BCCI auditor Deloitte) of LCB’s assets to show his cooperation with U.S. and British authorities. He even hired Patriot Act author and former U.S. Senator John Ashcroft to show his cooperation with U.S. law.
Sehnaoui acknowledged that “We bought certain assets of the Lebanese Canadian Bank, and only the clean ones. We did not take any even slightly questionable clients.”
But U.S. Treasury official Daniel Glaser was worried. “What the Central Bank (BDL, controlled by Riad Salameh) hasn’t fully demonstrated, and the jury is still out, is whether they will use this as a launching pad to ensure that these illicit actors aren’t migrating elsewhere.” To which Salameh responded that he does not involve himself in such commercial questions.
Fast forward to 2019, when Salameh’s BDL went on a spending binge that pushed up debt and caused a near-total collapse of the Lebanese economy – rated by the World Bank as one of the worst in 150 years.
A year later, BDL began selling dollars supposedly to bolster the Lebanese pound, with no tangible results.
United for Lebanon, a group of attorneys pledged to fight corruption, sued Salameh, Sehnaoui, and four others for “money laundering crimes resulting from currency trading operations with the intent of exposure to the national currency.”
Also in 2020, renowned Jordanian businessman Talal Abu-Ghazaleh sued SGBL and Sehnaoui for allegedly seizing $40 million of his company’s deposits. SGBL claimed that accounts set up by Abu-Ghazaleh and Sehnaoui had been terminated and that Abu-Ghazaleh had to come to Lebanon – travel forbidden at the time due to COVID-19 – to collect his money (a totally unlawful demand).
In a related criminal case, Lebanese Judge Ghada Aoun in 2022 issued travel bans against Sehnaoui and the heads of four other Lebanese banks as a precautionary measure, and in 2023 Judge Aoun formally charged SGBL and Sehnaoui with money laundering and froze the bank’s funds, then turned the prosecution over to Judge Nicolas Mansour.
Meanwhile, the families of victims of Hezbollah terrorism in Iraq filed a civil lawsuit against Sehnaoui, SGBL, and nine other banks for alleged collusion with the terrorist organization responsible for the deaths of their relatives.
What is transpiring now may become for SGBL and BDL the equivalent of what happened to BCCI three decades ago. In January, the U.S. Treasury placed sanctions on Lebanese money exchanger Hassan Moukalled and his company CTEX for conducting financial transactions to benefit Hezbollah at the expense of the Lebanese people and economy and pocketing hundreds of thousands of dollars for himself.
In February, Switzerland’s financial regulator launched enforcement proceedings against two of the 12 banks investigated in relation to corruption charges against Riad Salameh. Salameh, his brother Raja, and a third man were charged with money laundering, embezzlement, and illicit enrichment. The Salameh brothers were accused of illegally transferring $330 million from BDL to Swiss accounts via an offshore company during the period 2002-2015.
A March report by the International Monetary Fund stated that, “Lebanon is in a critical situation and failing to take the necessary actions will lead the country into an endless crisis.” The IMF also predicted that money laundering operations will become more frequent, noting credible reports of large cash deals being made without identifying the sources of the funds, in addition to drug dealing money and ties to Hezbollah’s al Qard al Hasan association.
In April, French prosecutors informed Riad Salameh of their plans to press preliminary fraud and money laundering charges against him based on forged bank statements he used to conceal his wealth. Salameh allegedly used a shell company established by his brother Raja to steal hundreds of millions in public funds over his three-decade tenure as central bank governor.
The new accusation comes on top of money laundering, illicit enrichment, and corruption charges Salameh is facing in Lebanon and at least five European countries. The Lebanese government, however, refused to extradite Salameh to face his accusers.
In June, Lebanese citizens rallied in front of BDL to demand the removal of capital controls Salameh had imposed in 2019 (after his actions had collapsed the Lebanese economy) to prevent them from withdrawing their savings. They demanded that Salameh be held accountable.
The 73-year-old Salameh was allowed to quietly resign as bank governor in July despite overseeing Lebanese financial losses in excess of $72 billion – more than three times the nation’s gross domestic product in 2021.
His legacy is summed up by Lebanese economist Toufic Gaspard, who asked, “What is the function of any governor of the central bank? To preserve the stability of the currency and more importantly, preserve the stability of the banking sector. The two collapsed (under Salameh’s watch). What more can you say?”
As for Sehnaoui, who was fingered along with Salameh in the scheme that led to the collapse of Lebanon’s economy and sued in the U.S. for money laundering to finance Hezbollah and Iranian terrorist operations, is also facing criminal money laundering charges in Lebanon. SGBL’s assets remain frozen.
A generation ago, BCCI was called “the perfect money laundering vehicle for everyone from Panamanian drug kingpins to Pakistan’s dictatorial first family to brutal regimes across the Middle East.” How long before Lebanese banks and individuals such as Salameh & Sehnaoui, and the banks they managed, will be known as the BCCI of the 21st Century?
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