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Lebanon: Corruption Amid Crisis

· 2 min read
Isabella Martinez
Financial Intelligence Officer

Once known as the "Switzerland of the Middle East," Lebanon's financial sector has been tarnished by rampant corruption and money laundering scandals in recent decades.

A History of Corruption​

  • The troubling trend began during Lebanon's 15-year civil war (1975-1990)
  • Post-war power-sharing agreements attempted to address corruption
    • Presidency: Maronite Christian
    • Speaker of National Assembly: Shia Muslim
    • Prime ministership: Sunni Muslim
    • All parliamentary seats, cabinet posts, and senior administrative roles must reflect these ratios

Unprecedented Levels of Corruption​

Despite these reforms, modern-day Lebanon has seen corruption reach new heights.

  • Allegations of illicit funds being funneled to terrorist organizations, most notably Hezbollah
  • Attempts to expose corruption in Lebanon's banking sector met with opposition

Economic Collapse and Protests​

The Lebanese economy took a grave turn for the worse in 2019.

  • Central Bank's poorly managed spending spree
  • Triggered public protests and demands for reforms from foreign lenders

The World Bank's Assessment​

  • One of the worst economic collapses in the last 150 years
  • More than 80% of Lebanese citizens plunged into poverty
  • The Lebanese pound lost 98% of its value against the U.S. dollar

High-Profile Corruption Cases​

Michel Mecattaf and Associates​

  • Criminal charges filed in August 2021 for money laundering
  • Central Bank Governor Riad Salameh, Antoun Sehnaoui, CEO of Société Générale Bank of Lebanon (SGBL), and some of the country's main money exchangers implicated

Riad Salameh​

  • Six European countries investigating for financial crimes
  • Denies any wrongdoing
  • Sanctioned by the United States and Canada, wanted by Interpol

Lebanon's Bleak Future​

Amid the financial crisis, banks have halted lending, and the Lebanese pound has dropped to a record low. Central bank financial operations have dwindled to a mere $10 million per day.

A Beacon of Hope: Ghada Aoun​

  • First attorney to apply Lebanon's Illicit Enrichment Law
  • Exposed ties between Lebanese banks and Hezbollah in U.S. courts
  • Target of organized smear campaigns

The Importance of the Rule of Law​

  • Essential for Lebanon to recover from crises
  • Judicial system must remain resilient in pursuit of justice