Banking officials and residents in Beirut are concerned about a US pressure
group’s report that Hezbollah and Iran are using Lebanon’s banks in a large
money-laundering scheme, a leading Lebanese daily reported on
New York-based United Against a Nuclear Iran (UANI) made public
last month the results of a three-month, confidential investigation into the
influence of Iran and Hezbollah on Lebanon’s banking system and sovereign bond
The group says Lebanon’s financial system – including Banque du
Liban, the country’s central bank – is being used to funnel massive amounts of
illicit cash for Hezbollah and its state sponsor, Iran.
banking system provides the means by which Iran transacts funds transfers to
evade the effects of sanctions and the growing international banking blockade
against Iran, and allows the money transfers that support illicit weapons and
other transactions, including with Syria,” UANI said.
about the report come after several groups – Austria’s Erste Sparinvest, Eaton
Vance Investment Managers, Nord Est Asset Management, Ameriprise and Aktia Fund
Management – divested from Lebanese sovereign debt securities.
UANI also called on Advanced Series Trust and its investment adviser Prudential
Investments LLC to divest from Lebanese debt securities.
that UANI’s campaign has also singled out Riad Salameh, governor of Banque du
In February, Salameh denied that there is any relationship between
Banque du Liban and Iran’s central bank.
According to As-Safir, unnamed
banking officials in Beirut said the report was “invective, insults, defamation
and a pack of false allegations,” and showed a “partial understanding of the
nature of the Lebanese economy.”
Lebanese officials are working to
respond to the report, the paper said, including by preparing a detailed list of
answers to questions raised in the report and explanations about Lebanon’s
fiscal policies and public finance sector.
The paper noted that in June,
US Secretary of State Hillary Clinton called Prime Minister Najib Mikati to
stress her support for Lebanon’s stability and express confidence in the
country’s financial institutions.
Citing unnamed financial sector
sources, As-Safir said that Lebanon’s banks and financial institutions had
pledged not to deal with any individuals named on US sanctions lists.
same sources said that Lebanon’s ability to avoid any repercussions from the
global economic turndown lies in its credibility as a financially stable
As-Safir challenged UANI’s conclusions that one of the
indicators that Hezbollah and Iran are using Lebanese banking system in a
wide-scale money=laundering scheme is the discrepancy between the volume of
financial transactions in Lebanon and the size of its economy.
pressure group argue that despite Lebanon’s devastated economy, its currency and
banking system operate as if they belonged within a more successful
Lebanese sovereign debt to GDP ratio is the fourth highest in the
world, yet the country’s sovereign bonds and credit default swaps trade at low
yields, UANI found, noting that the cost of Lebanese debt has decreased
considerably since 2006, which the group said coincides with increased sanctions
pressure against Iran.
As-Safir argues that these figures are not unusual
and that the Lebanese banking sector has relied disproportionately on the
outside world since World War I.
Regarding the impact of the campaign,
As-Safir said the Lebanese banking system has always been vulnerable to US
influence, but that vulnerability grew after the events of September 11, 2001,
with the advent of new technological advances and tools to fight
The campaign against Lebanon’s banking sector has received
increased attention in Beirut following a recent report filed by the New York
State Department of Financial Services, which alleged that the UK’s Standard
Chartered bank schemed with the Iranian regime – and by extension its Lebanese
proxy Hezbollah – to conceal more than $250 billion in illegal
On Wednesday, Beirut-based newspaper Al-Akhbar cited an
unnamed Lebanese politician as saying that Washington was trying to increase
pressure on major European banks to comply with US international sanctions
“It is no secret among Lebanese bankers that Americans have
become more aggressive in this area lately,” Al-Akhbar said, adding that banking
sector officials believe the US believes the sanctions authorize Washington to
use the tools it deems appropriate to address terrorist and security
In response, UANI spokesman Nathan Carleton said that Lebanese
banking officials should be concerned about the campaign, noting that several
bondholders had divested from Lebanese sovereign debt.
Bank Governor Riad Salame has said absolutely nothing in response to UANI, and
his silence has been deafening,” Carleton added. “He has notably been unable to
answer even basic questions about Iran’s role in Lebanon’s banking system,
including whether he agrees with Hezbollah’s leadership that its funding comes
entirely from Iran.”
Regarding criticisms of UANI’s explanations over the
Lebanese sovereign debt to GDP ratio, Carleton said there was “no innocent
explanation as to why Lebanon’s numbers are so off-kilter.”
“While we are
not privy to private conversations between US and Lebanese officials, we doubt
that the US has truly been giving the Lebanese banking system a 100-percent
clean bill of health. After all, the idea that Iran funnels money to terrorists
through Lebanon is not new, and has been acknowledged by the US before,”