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From acclaim to blame: Lebanon bank chief Riad Salameh

Lebanon's central bank governor Riad Salameh stands next to stacks of gold bars in the bank vaults in the Lebanese capital Beirut on November 24, 2022
— Beirut (AFP)

Once lauded for reviving Lebanon's economy, central bank chief Riad Salameh left office Monday after three decades in the job, wanted abroad and reviled at home after years of financial meltdown.

The 73-year-old French-Lebanese national is widely viewed as a key culprit in the country's dramatic economic crash, which the World Bank called one of the worst in recent history.

Salameh is also wanted by authorities in France and Germany for alleged financial crimes, with Interpol issuing Red Notices targeting him. Lebanon does not extradite its citizens.

One of the world's longest-serving central bank governors, he faces numerous accusations including embezzlement, money laundering and tax evasion in separate probes in Lebanon and abroad.

Salameh has repeatedly denied wrongdoing and defended his legacy.

"I believe that for 27 of the past 30 years, the central bank has contributed to establishing stability and economic growth," he told a local broadcaster, days before his mandate ended.

Salameh's departure sets the stage for a leadership crisis as divided politicians failed to agree on a successor, in a country already governed by a caretaker Cabinet with limited powers and without a president.

Under Lebanese law, the bank's first vice-governor, Wassim Manssouri, takes over temporarily.

- Revived the economy -

European delegations have made several trips this year to Beirut to question Salameh, his brother and others in his close circle.

In March 2022, France, Germany and Luxembourg seized assets worth $130 million in a move linked to a French probe into Salameh's personal wealth.

Earlier this year, Lebanon charged him with embezzlement, money laundering and tax evasion.

The domestic probe was opened following a request for assistance from Switzerland's public prosecutor, who is investigating more than $300 million in fund movements by Salameh and his brother.

In February, Swiss media reported that 12 banks in the country had received up to $500 million in money Salameh is alleged to have embezzled.

Lebanon's Central Bank Governor Riad Salameh poses during a studio photo session in the capital Beirut, on December 20, 2021

Before his judicial troubles, he was largely viewed as the architect of the financial policy that allowed Lebanon to recover from a grinding 1975-1990 civil war, and was responsible for pegging the Lebanese pound at 1,507 to the dollar.

Known for his calm demeanour, he studied economics at the American University of Beirut and worked for Merrill Lynch in the Lebanese capital before becoming its vice-president in France.

"He has been a trader and a broker all his life -- that is the problem," said one veteran Lebanese financial expert, speaking on condition of anonymity.

"You need an economist to run a central bank, not somebody too close to the banking system that he wants to protect."

In 1993, Salameh was nominated as central bank governor by then prime minister Rafic Hariri, a wealthy real estate developer whose portfolio Salameh handled at Merrill Lynch.

Salameh received accolades, named the world's best central bank governor by Euromoney in 2006 and by The Banker magazine in 2009.

"He's the man who knew how to revive the economy and gain the confidence of investors," said economist Nicolas Chikhani.

- 'Warning signs' -

Riad Salameh

But after war broke out in neighbouring Syria in 2011, "warning signs started to grow" for the Lebanese economy, Chikhani said.

Successive governments failed to take action to restructure the economy, and public debt piled up.

From 2016, Salameh launched so-called financial engineering aimed at increasing central bank reserves, providing capital to banks and maintaining the value of the pound, in measures that some have compared to a Ponzi scheme.

In late 2019, he became the main focus of public anger as the economy began to unravel, and in 2020 Lebanon defaulted on its debt for the first time.

Commercial banks imposed draconian withdrawal restrictions when the economy collapsed, preventing depositors from accessing their life savings.

Meanwhile, Salameh was allegedly helping politicians transfer "a total of $9 billion" in personal wealth abroad, a veteran banker told AFP on condition of anonymity because of the sensitivity of this topic.

Salameh "never refused the political class anything", and "protected the banks whose main shareholders are politicians" because he had presidential aspirations, the banker said.

In the days leading to Salameh's retirement, he told local media the political class abandoned him "a long time ago", as he became a "scapegoat" for Lebanon's economic collapse.